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Class. 



Book 



PUKSKNTlill) BY 



t-l 



CONVERSATIONS 



POLITICAL ECONOMY; 



IW WHICH 



THE ELEMENTS OF THAT SCIENCE 



FAMILIARLY EXPLAINED. 



BY THE AUTHOR OF 

CONVERSATIONS ON CHEMISTRY AND NATURAL PHILOSOPHY. 




CORRECTED AND IMPROVED, ANDr ADAPTED TO THE USE OF 

SCHOOLS. 

BY REV. J. Lr. BliAKE, A. M. 



BOSTON, 

BOWLES & DEARBORN, 72 WASHINGTON STREET. 

1828. 



Vi 



T 






DISTRICT OF MASSACHUSETTS, tO wit .' 

District Clerk's Office. 

Be it remembered, that on the thhtyfirst day of May, A. d. 1828, 
in the fiftysecond year of the Independence of the United States 
OF America, Bowles and Dearhorn, of the said District, have de- 
posited in this ofSce the title of a book, the right whereof they claim 
as proprietors, in the words following, to wit : 

''Conversations on Political Economy; in which the elements 
of that science are familiarly explained. By the author of Conver- 
sations on Chemistry and Natural Philosophy. Corrected and im- 
proved, and adapted to the^use of schools. By Rev. J. L. Blake, 
A. M." 

In conformity to the act of the Congress of the United States, en- 
titled, "An act for the encouragement of learning, by securing the 
copies of maps, charts and books, to the authors and proprietors of 
such copies, during the times therein mentioned ;" and also to an 
act, entitled, " An act supplementary to an act, entitled an act for 
the encouragement of learning, by securing the copies of maps, 
ch'arts, and books, to the authors and proprietors of such copies dur- 
ing the times therein mentioned ; and extending the benefits thereof 
to the arts of designing, engraving and etching historical and other 
prints." 

TNTO w r>AVT^ \ Clerk of the District of 
jr^U. vv.UAVib, ^ Massachusetts. 

Mrs. Hennen Jenntnss 
April 26, 1933 



BOSTON", 

Press of I. R. Butts & Co. 



PREFACE. 



In offering to the public this small work, in which it 
is attempied to bring within the reach of young persons 
. science which no English writer has yet presented in 
1 easy and familiar form, the author is far from infer- 
g from the unexpected success of a former elementary 
>rk, on the subject of chemistry, that the present 
empt is likely to be received with equal favor. Po- 
ical economy, though so immediately connected with 
the happiness and improvement of mankind, and the 
object of so much controversy and speculation among 
men of knowledge, is not yet become a popular science, 
and is not generally considered as a study essential to early 
education. This work, therefore, independently of all 
its defects, will have to contend against the novelty of 
the pursuit with young persons of either sex, for the in- 
struction of whom it is especially intended. If, however, 
it should be found useful, and if, upon the whole, the 
doctrines it contains should appear sound and sufficiently 



4 PREFACE, 

well explained, the author flatters herself that this 
attempt will not be too severely judged. She hopes it 
will be remembered that in devising the plan of this 
work, she was in a great degree obliged to form the path 
she has pursued, and had scarcely any other guide in 
this popular mode of viewing the subject, than the recol- 
lection of the impressions she herself experienced when 
she first turned her attention to this study ; though she 
has subsequently derived great assistance from the kind- 
ness of a few friends, who revised her sheets as she 
advanced in the undertaking. 

As to the principles and materials of the work, it is so 
obvious that they have been obtained from the writings 
of the great masters who have treated this subject, and 
more particularly from those of Dr Adam Smith, of Mr 
Malthus, M. Say, and M. Sismondi, that the author has 
not thought it necessary to load these pages with re- 
peated acknowledgments and incessant references. 

It will immediately be perceived by those to whom the 
subject is not new, that a few of the most abstruse ques- 
tions and controversies of political economy have been 
entirely omitted, and that others have been stated and 
discussed without any positive conclusion being deduced. 
This is a defect unavoidably attached not only to the 
author's limited knowledge, but also to the real difficulty 
of the science. In general, however, when the sound- 

)' 



PREFACE. 5 

ness of a doctrine has appeared well established, it Itias. 
been stated conscientiously, without any excess of caution 
or reserve, and with the sole object of diffusing useful 
truths. 

It has often been a matter of doubt among the author's 
literary advisers, whether the form of dialogues, which 
was adopted in the Conversations on Chemistry, should 
be preserved in this essay. She has, however, ultimately 
decided for the affirmative ; not that she particularly 
studied to introduce strict consistency of character, or 
uniformity of intellect, in the remarks of her pupil, an 
attempt which might have often impeded the elucidation of 
the subject ; but because it gave her an opportunity of 
introducing objections, and placing in various points of 
view questions and answers as they had actually occurred 
to her own mind, a plan which would not have suited a 
more didactic composition. It will be observed accord- 
ingly, that the colloquial form is not here confined to the 
mere intersection of the argument by questions and 
anwers, as in common school books ; but that the 
questions are generally the vehicle of some collateral re- 
marks contributing to illustrate the subject ; and that 
they are in fact such as would be likely to arise in the. 
mind of an intelligent young person, fluctuating between, 
the impulse of her heart and the progress of her reason, 
and naturally imbued with^ll the prejudices and popular 

feelings of uninformed 'benevolence. 
1* 



b PREFACE. 

NOTE BY THE AMERICAN EDITOR. 

About 5000 copies of the improved edition of Conver- 
sations on Natural Philosophy are sold annually ; and the 
sale of the improved edition of Conversations on Chemistry 
is nearly as great. The author of the improvements in 
those works is hence induced to adapt to the use of 
schools, on the same plan, the Conversations on Political 
Economy. The subject of the volume, now presented to 
the public in an improved form, has not excited much 
interest in our country, and is of course but little under- 
stood ; but so evident is the importance of it to the well- 
being of the community, and so rapidly advancing is the 
state of education with us, that the editor doubts not he 
anticipates, in this undertaking, wants which will soon 
become so apparent that they cannot be neglected. In- 
deed, public attention during the last few years, has been 
considerably directed to the science of Political Econo- 
my, and the study of it has already been introduced into 
some of our seminaries of learning. It is believed an 
example so good will generally soon be followed ; and, 
that this new effort to aid the rising generation will re- 
ceive due consideration and favor. 

J. L. BLAKE. 

Boston, May 30, 1828. 



CONTENTS. 



CONVERSATION I. 

INTRODUCTION. 

Errors arising from total ignorance of Political Economy.— 
Advantages resulting from the knowledge of its principles. 
— Difficulties to be surmounted in this study, 12 

CONVERSATION II. 

INTRODUCTION CONTINUED. 

Definition of Political Economy. — Rise and progress of socie- 
ty. — Connexion between Political Economy and morality. 
— Definition of wealth, 23 

CONVERSATION III. 

ON PROPERTY. 

About the origin of wealth. — Legal institution of property. — 
Of landed property. — Security the result of property. — 
Objections to landed property answered. — Origin of na- 
tions in a savage or pastoral life. — Their progress in agri- 
culture. — Cultivation of corn. — Recapitulation, 31 

CONVERSATION IV. 

ON PROPERTY CONTINUED. 

Effects of insecurity of property. — Examples from Volney's 
Travels.— Objections raised against civilization. — State of 
Boetica from Telemachus. — Objections to community of 
goods. — Establishment of Jesuits in Paraguay. — Moravians. 
— State of Switzerland. — Advantages resulting from the 
establishment and security of property, 43 

CONVERSATION V. 

ON THE DIVISION OF LABOR. 

Origin of barter. — Division of labor. — Extracts from Smith's 
Wealth of Nation/ on the division of labor. — Advantages 



8 CONTENTS. 

of machinery. — Effects of the division of labor on the- 
morals and intellects of the people. — Recapitulation, 53. 

CONVERSATION VI, 

ON CAPITAL. 

Distinction of rich and poor. — Accumulation of wealth. — - 
How it is disposed of. — The poor labor for it. — Contract 
between the capitalist and the laborer. — The rich under the 
necessity of employing the poor. — Definition of capital. — 
How capital yields an income. — Profits made by the em- 
ployment of laborers. — Productive laborers. — Indepen- 
dence of men of capital. — Industry limited by extent of 
capital. — Industry increases in proportion to capital. — Capi- 
tal augmented by the addition of savings fi*om income. — 
Happiness resulting rather from the gradual acquisition, 
than the actual possession of wealth, 67 

CONVERSATION VII. 

ON CAPITAL CONTINUED. 

Of fixed capital. — Distinction between fixed and circulating 
capital. — Examples of the different kinds of capital. — Of 
slaves. — Fixed capital and circulating capital equally bene- 
ficial to the laboring class. — Machinery advantageous to 
the laboring classes. — Quotation from Macpherson on the 
advantages of machinery. — Quotation from M. Say's 
Treatise on Political Economy, 79 

CONVERSATION VIII. 

ON WAGES AND POPULATION. 

Extreme limits of wages. — Wages regulated by the propor- 
tion which capital bears to population. — Small capital cre- 
ates small demand for labor, low wages, and great profit 
to the capitalist. — Increase of capital creates greater de- 
mand for labor, higher wages, and less profit to the 
capitalist. — Necessity of raising subsistence before other 
works are undertaken. — How wages are lowered by the 
increase of population without an increase of capital. — 
Effect of scarcity of provisions on wages — effect of rais- 
ing wages during a scarcity. — Of a maximum price of pro- 
visions. — Effect of a diminution of population by sickness 
on the rate of wages. — It is not work, but funds that cre- 
ates a demand for labor. — Wages^n Ireland. — Wages in 
town and country, /• 88 



CONTENTS. y 

CONVERSATION IX. 

ON WAGES AND POPULATION CONTINUED. 

High wages not invariably accompanying great capital. — 
Great capital and low wages in China. — Small capital and 
high wages in America. — Advantages of new settled 
countries. — Poverty the natural check to population.— 
Great population advantageous only when resulting from 
plenty. — Increasing wealth preferable to any stationary 
capital. Mistake in encouraging population. — ^Population 
of manufacturing towns. — Industry. — Piecework, 103 

CONVERSATION X. 

ON THE CONDITION OF THE POOR. 

Of the cultivation of common and waste lands. — Of emigra- 
tion. — Education of the lower classes. — Benefit clubs. — 
Savings banks. — Parochial relief. — Alms and private 
charities. — Rewards, 115 ' 

CONVERSATION XI. 

ON REVENUE. 

Modes of employing capital to produce revenue. — ^Which of 
these is most advantageous. — Varies according to the 
state of the country. — Garnier's observations on the em- 
ployment of capital. — Equality of profits aflrords a criterion 
of the due distribution of capital. — Natural arrangements 
of the distribution of capital. — Equality of profits in agri- 
culture, manufactures, and trade.— Why those profits ap- 
pear unequal, 129 

CONVERSATION XII. 

ON REVENUE DERIVED FROM PROPERTY IN LAND. 

On rent. — High price of agricultural produce the effect, 
not the cause of rent. — Causes of rent ; 1. The fertility of 
the earth ; 2. Diversity of soil and situation requiring dif- 
ferent degrees of expense to raise similar produce. — Ori- 
gin of rent. — Rent increases positively in a progressive 
country, and diminishes relatively. — High price of raw 
produce necessary to proportion the demand to the supply. 
— Monopoly of land. — Monopoly defined, 141 



10 CONTENTS. 

CONVERSATION XIII. 

ON REVENUE DERIVED FROM THE CULTIVATION OF LAND. 

Two capitals employed on land. — Two revenues derived from 
it. — Of the capital and profits of the farmer. — Of the du- 
ration and terms of leases. — Of tythes. — Extract from 
Paley. — Of proprietors farming their own estates. — Ex- 
tract from Townsend's Travels. — Farms held in adminis- 
tration. — Advantage of an opulent tenantry. — Metayer 
system of farming. — Small landed properties. — Extract 
from Arthur Young's Travels. — Dairy establishments in 
Switzerland. — Small farms. — Size of farms in Belgium and 
Tuscany. — Of mines. — Of fisheries, 158 

CONVERSATION XIV. 

ON THE REVENUE OF THOSE WHO DO NOT EMPLOY THEIR 
CAPITAL THEMSELVES. 

Rent, or income derived from letting land. — Interest of mon- 
- ey, or income derived from loans. — Causes of the diflfer- 
ent rate of interest yielded by land or by money. — Causes 
of the fluctuations of interest. — Rate of interest in India, 
in China, and in America. — Of usury. — Government loans, 
or income derived from the funds. — Of unproductive labor- 
ers, or those who derive an income from the expenditure 
of others, 182 

CONVERSATION XV. 

ON VALUE AND PRICE. 

Of the value of commodities. — Of the distinction between 
exchangeable value and price. — Of utility considered as 
essential to value. — Of the cost of production, or natural 
value of commodities. — Of the component parts of the 
cost of production, rent, profit, and wages. — Of their im- 
perfection as am.easure of value. — Of supply and demand. — 
Of the component parts of the exchangeable value of com- 
modities. — High price of commodities arising from scarci- 
ty. — Low price arising from excessive supply. — Low price 
arising from diminution of cost of production, -' 199 

CONVERSATION XVI. 

ON MONET. 

Of the use of money as a medium of exchange. — Of coining. — 
Use of money as a standard of Vilue. — Of the variation of 
the exchangeable value of gold And silver. — In what man- 



CONTENTS. 11 

ner it aifects the price of commodities. — Of nominal and 
real cheapness. — What classes of people are affected by 
the variation in the value of gold and silver. — How far 
money constitutes a part of the wealth of a country. — Of 
the exportation of money. — Of the means by which the 
value of the precious metals equalises itself in all parts of 
the civilized world, 217 

CONVERSATION XVII. 

SUBJECT or MONEY CONTINUED. 

Of the depreciation of gold and silver. — Of the adulteration 
and depreciation of coined money. — Of banks. — Of paper 
money. — Effects of paper money when not payable in specie 
on demand. — Of the proportion of currency to the com- 
modities to be circulated by it, 235 

CONVERSATION XVIII. 

ON COMMERCE. 

Difference of wholesale and retail trade. — General advantages 
of trade. — How it enriches a country. — Advantages of 
retail trade. — Great profits of small capitals explained. — 
Advantages of quick return of capital to farmers and 
manufacturers. — Advantages of roads, canals, &c. — Dif- 
ference of the home trade, foreign trade, and carrying 
trade. — Of the home trade, it employs two capitals at home, 
and puts in motion double the quantity of home industry. 
— It returns capital quicker, 253 

CONVERSATION XIX. 

ON FOREIGN TRADE. 

Advantages of foreign trade. — It employs the surplus of capi- 
tal, and disposes of a surplus o^ commodities. — Of boun- 
ties. — Effects of restrictions on foreign trade. — Extract 
from Say's Political Economy. — Extract from Franklin's 
Works, 269 

CONVERSATION XX. 

CONTINUATION OF FOREIGN TRADE. 

On the corn trade. — Consequences depending upon a home 
supply of corn in countries of great capital and population. 
— ^It produces high prices in ordinary seasons, and great 
fluctuation of prices in tkries of scarcity and of abundance. 
— Why this is not thfjcase in newly settled countries. — 



12 CONTENTS. 

Propriety of free trade in general. — Danger of introducing 
a new branch of industry prematurely. — Extract from Mi- 
rabeau's Monarchic Prussienne on the advantages of free 
commercial intercourse, 283 

CONVERSATION XXL 

SUBJECT or FOREIGN TRADE CONTINUED. 

Of bills of exchange. — Of the balance of trade. — Cause of the 
real variation of the exchange. — Disproportion of exports 
and imports. — Cause of the nominal variation of the ex- 
change. — Depreciation of the value of the currency of the 
country, . 293 

CONVERSATION XXII. 

ON EXPENDITURE. 

Of the, disposal of revenue. — Of the expenditure of individu- 
als. — Effects of consuming capital. — Increase of revenue 
of a country beneficial to all classes of people. — Except in 
cases where government interferes with the disposal of 
capital. — Of sumptuary laws. — Of luxury. — Industry promo- 
ted by luxury. — Passages from Paley on luxury. — Sudden 
increase of wealth prejudicial to the laboring classes. — 
Passages from Bentham on legislation. — Luxury of the 
Romans not the result of industry. — Of the disadvantages 
arising from excess of luxury, 309 



:^. 



CONVERSATION I. 

INTRODUCTION. 



Errors arising from total ignorance of Political Econo- 
my. — Advantages resulting from the knowledge of 
its principles. — Difficulties to be surmounted in this 
study. 



MRS B. 



We differ so much respecting the m-erit of the pas- 
sage you mentioned this' morning, that I cannot help 
suspecting some inaccuracy in the quotation. 

Caroline. Then pray allow me to read it to you : it 
is immediately after the return of Telemachiis to Salen- 
tum, when he expresses his astonishment to Mentor at 
the change that has taken place since his former visit ; 
he says, " Has any misfortune happened to Salentum in 
my absence ? the magnificence and splendor in which I 
left it have disappeared. I see neither silver, or gold, 
nor jewels, the habits of the people are plain, the build- 
ings are smaller and more simple, the arts languish, and 
the city is become a desert." — " Have you observed," 
replied Mentor with a smile, " the state of the country 
that lies round it?"- — "Yes," said Telemachus, " I per- 
ceive that agriculture is become an honorable profession, 
and that there is not a field uncukivated." — " And which 
is best," replied Mentor, " a superb city, abounding 
with marble, gold, and silver, with a steril and neglected 
country ; or a country in a state of high cultivation, and 
fruitful as a garden, with a city where decency has taken 
place of pomp ? A great city full of artificers, who are 
employed only to effeminate the manners, by furnishing 
the superfluities of luxury, surrounded by a poor and 

1. What is the quotation from Telemachus with which this work 
commences ? 2. What is the leading sentiment in tfiis quota- 
tion ? 



14 INTRODUCTION, 

uncultivated country, resembles a monster with a head 
of enormous size, and a withered, enervated body, with- 
out beauty, vigor, or proportion. The genuine strength 
and true riches of a kingdoin consists in the number of 
people, and the plenty of provisions ; and innumerable 
people now cover the whole territory of Idomeneus, 
which they cultivate with unwearied diligence and assi- 
duity. His dominions may be considered as one town, 
of which Salentum is die centre ; for the people that 
were wanting in the fields, and superfluous in the city, 
we have removed from the city to the fields." 

Well, must 1 proceed, or have I read enough to con- 
vince you that Mentor is right? 

Mrs B. I still persist in my opinion ; for though 
some of the sentiments in this passage are perfectly just, 
yet the general principle on which they are founded, 
that town and country thrive at the expense of each 
other, I believe to be quite erroneous : I am convinced, 
on the contrary, that flourishing cities are the means of 
fertilizing the fields around them. Do you see any want 
of cultivation in the neighborhood of London ? or can 
you name any highly improved country which does not 
abound with wealthy and populous cities ? On the other 
hand, what is more common than to observe decayed 
cities environed by barren and ill cultivated lands ? The 
purple and gold of Tyre during the prosperity of the 
Phoenicians, far from depriving the fields of their labor- 
ers, obliged that natipn to colonize new countries as a 
provision for its excess of population. 

Caroline. That is going very far back for an exam- 
ple. 

Mrs B. If you wish to come down to a later period, 
compare the ancient flourishing state of Phoenicia, with 
its present wretchedness, so forcibly described by Volney 
in his travels. 



3. Does Mrs B. consider this sentiment correct ? 4, What 

is her opinion upon the subject ? 5. What does she say in sup- 
port of her opinion ? 6. What is the present condition of Phoe- 
nicia according to Volney ? 



INTRODUCTION. 1 5 

Caroline. Has not this wretchedness been produced 
by violent revolutions, which during a course of ages 
have impoverished that devoted country, and does it not 
continue in consequence of the detestable policy of its 
present masters ? But in the natural and undisturbed 
order of things, is it not clear that the greater number of 
laborers a sovereign should, after the example of Idome- 
neus, compel to quit the town in order to work in the 
country, the better that country would be cultivated? 

Mrs B. I do not think so ; I am of opinion on the 
contrary that the people thus compelled to quit the town, 
would not find VN^ork in the country. 

Caroline. And why not ? 

Mrs B. Because there would already be as many 
laborers in the country as could find employment. 

Caroline. In England that might possibly be the 
case, but would it be so in badly cultivated countries. 

Mrs B. I think it would. 

Caroline. Do you mean to say that if a country 
which is ill cultivated were provided with a greater num- 
ber of laborers it would not be improved ? You must 
allow that this requires some explanation. 

Mrs B. It does so, and perhaps even more than 
you imagine ; for you cannot well understand this ques- 
tion without some knowledge of the principles of political 
economy. 

Caroline. I am very sorry to hear that, for I confess 
that I have a sort of antipathy to political economy. 

Mrs B. Are you sure that you understand what is 
meant by political economy ? 

7. What inquiry does Caroline make concerning Phoenicia, 

with a view to invalidate Mrs B.'s opinion ? 8. Why does 

Mrs B. think that people thus compelled to leave the town would not 

find work in the country ? 9. Concerning what place does 

Caroline admit Mrs B.'s opinion to be just ? 10. ' What does Mrs 

B. say persons must understaa^, before they can comprehend how a 
country, under such circumstances, would remain unimproved, 
i?.Jthough furnished with an abundance of laborers ? 



16 INTRODUCTION, 

Caroline. I believe so, as it is often the subject of 
^'^conversation at home ; but it appears to me the most 
uninteresting of all subjects. It is about custom houses, 
and trade, and taxes, and bounties, and smuggling, and 
paper money, and the bullion committee, &c, which I 
cannot hear named without yawning. Then there is a 
perpetual reference to the works of Adam Smith, whose 
name is never uttered without such a respectful, and 
almost religious veneration, that I was induced one day 
to look into his work on political economy to gain some 
information on the subject of corn, but what with fore- 
stalling, regrating, duties, drawbacks, and limiting prices, 
I was so overwhelmed by a jargon of unintelligible terms, 
that after running over a few pages I threw the book 
away in despair, and resolved to eat my bread in humble 
ignorance. So if our argument respecting town and 
country relates to political economy, I fancy that J must 
be contented to yield the point in dispute without under- 
standing it. 

Mrs B, Well then, if you can remain satisfied with 
your ignorance of political economy you should at least 
make up your mind to forbear from talking of it, since 
you cannot do it to any purpose, 

Caroline. Oh! that, I assure you, requires very little 
effort : I only wish that I was as certain of never hear- 
ing the subject mentioned, as I am of never talking upon 
it myself. 

M?'s B. Do you recollect how heartily you laughed 
at poor Mr Jourdain in the Bourgeois- Gentilhorome, 
when he discovered that he had been speaking in prose 
all his life without knowing it ? — Well, my dear, you 
frequently talk of political economy without knowing it. 
But a few days since J heard you deciding on the very 
question of the scarcity of corn ; and it mu&t be confess- 
ed that your verdict was in perfect unison with your 
present profession of ignorance." 

11. What does Caroline understand by political economy ? 

12. To what writer does she allude ? 13. For what did Caro- 
line laugh at Jourdain 1 What application does Mrs B. make of 

this anecdote ? 



INTRODUCTION. 1 < 

Caroline. Indeed I only repeated what I had heard 
from very sensible people, that the farmers had a great 
deal of corn ; that if they were compelled to bring it to 
market there would be no scarcity, and that they kept 
it back with a view to their own interests, in order to 
raise the price. Surely it does not require a knowledge 
of political economy to speak on so common, so interest- 
ing a subject as this first necessary of life. 

Mrs B. The very circumstance of its general inte- 
rest renders it one of the most important branches of 
political economy. Unfortunately for your resolution, 
this science spreads into so many ramifications that you 
will seldom hear a conversation amongst liberal minded 
people without some reference to it. It was but yester- 
day that you accused the Birmingham manufacturers of 
cruelty and injustice towards their workmen, and assert- 
ed that the rate of wages should be proportioned by 
law to that of provisions ; so that the poor might not be 
sufferers by a rise in the price of bread. I dare say 
you thought that you had made a very rational speech 
when you so decided ? 

Caroline. And was I mistaken ? You begin to ex- 
cite my curiosity, Mrs B. ; do you think I shall ever be 
tempted to study this science ^ 

Mrs B. I do not know ; but I have no doubt that 1 
shall convince you of your incapacity to enter on most 
subjects of general conversation, whilst you remain in 
total ignorance of it ; and that however guarded you 
may be, that ignorance will be betrayed, and may fre- 
quently expose you to ridicule. During the riots at Not- 
tingham I recollect hearing you condemn the invention of 
machines, which by abridging labor, throw a number of 
workmen out of employment. Your opinion was found- 
ed upon mistaken principles of benevolence. In shoitj 

15. What was the case mentioned by Carohne to which Mrs B. 

alluded 16. "VVTiat did Caroline assert respecting the Birmingham 

manufacturers ? 17. Of what does Mrs B. propose to convince 

Caroline? 18. Why did Caroline condemn the invention oi 

machines ? 

2-^ 



1 8 INTRODUCTION, 

my dear, so many things are more or less connected 
with the science of political economy, that if you perse- 
vere in your resolution you might almost as well condemn 
yourself to perpetual silence. 

Caroline. 1 should at least be privileged to talk about 
dress, amusements, and such lady like topics. 

Mrs B. I have heard no trifling degree of ignorance 
of political economy betrayed in talking of dress. 
" What a pity," said one lady, "that French lace should 
be so dear ; for ray part I make no scruple of smuggling 
it; there is really a great satisfaction in cheating the 
custom house." Another wondered she could so easily 
reconcile smuggling to her conscience ; that she thought 
French laces and silks, and all French goods should be 
totally prohibited ; that she was determined never to 
wear any thing from foreign countries, let it be ever so 
beautiful ; and that it was shameful to encourage foreign 
manufactures whilst our own poor were starving. 

Caroline. What fault can you find with the latter 
opinion? It appears to me to be replete with humanity 
and patriotism. 

Mrs B. The benevolence of the lady I do not ques- 
tion ; but without knowledge to guide and sense to 
regulate the feelings, the best intentions will be frustrated. 
The science of political economy is intimately connected 
with the daily occurrences of life, and in this respect 
differs materially from that of chemistry, astronomy, or 
electricity; the mistakes we may fall into in the latter 
sciences can have little sensible effect upon our conduct, 
whilst our ignorance of the former may lead us into 
serious practical errors. 

There is scarcely any history or any account of voy- 
ages or travels that does not abound with facts and opin- 
ions, the bearings of which cannot be understood witliout 

19. What was said of the French laces by the two ladies men- 
tioned by Mrs B. ? 20. With what is^political economy intimate- 
ly connected ? 21. What works abound in facts and opinions, 

the bearing of which cannot be understood without a knowledge 
of this science ? 



INTRODUCTION. 1 9 

some previous acquaintance with the principles of politi- 
cal economy: besides, should the author himself be 
deficient in his knowledge, you will be continually liable 
to adopt his errors from inability to detect them. This 
was your case in reading Telemachus. Ignorance of 
the principles of political economy is to be discovered in 
some of the most elegant and sensible of our writers, 
especially amongst tlie poets. That beautiful composition 
of Goldsmith, the Deserted Village, is full of errors of 
this description, which, from its great popularity, are 
very liable to mislead the ill-informed. 

Caroline. I should almost regret to- learn anything 
which would lower that beautiful poem in my estimation. 

Mrs B. Its intrinsic merit as a poem is quite suffi- 
cient to atone for any errors in scientific principles. Truth 
is not, you know, essential to poetic beauty ; but it is 
essential that we should be able to distinguish between 
truth and fiction. 

Caroline. Well, after all, Mrs B., ignorance of 
political economy is a very excusable deficiency in 
women. It is the business of government to reforrli the 
prejudices and errors which prevail respecting it ; and 
as we are never likely to become legislators, is it not just 
as, well that we should remain in happy ignorance of evils 
which we have no power to remedy ? 

Airs B. Wheil you plead in favor of ignorance, 
there is a strong presumption that you are in the wrong. 
If a more general knowledge of political economy pre- 
vented women from propagating errors respecting it, no 
trifling good would ensue. Childhood is spent in ac- 
quiring ideas, adolescence in discriminating and rejecting 
those which are false : how greatly we should facilitate 
this labor by diminishing the number of errors imbibed 
in early youth, and by inculcating such ideas only as are 
founded in truth. 

22. What popular work is mentioned as being full of errors ? 

23. What, in Mrs B.'s opinion, atones for errors of sentiment, in the 

Deserted Village ? 24. Why does Caroline think women need 

not understand political economy ? 25. Why does Mrs B. think 

they ought to understand it ? 



20 INTRODUCTION. 

Caroline. Surely you would not teach political 
economy to children? 

Mrs B. I would wish that mothers were so far 
competent to teach it, that their children should not 
have any thing to unlearn ; and if they could convey 
such lessons of political economy as Miss Edgeworth 
gives in her story of the cherry orchard, no one, I should 
think, would esteem such information beyond the ca- 
pacity of a child. 

Caroline. I thought I remembered that story per- 
fectly, but I do not recollect in it a single word relative 
to political economy. 

Mrs B. The author has judiciously avoided naming 
the science, but that litttle tale contains a simple and 
beautiful exposition of the division of labor, the merit 
of which you would more highly appreciate if you were 
acquainted with its application to political economy. 
You would perhaps allow children to hear the story 
of king Midas, whose touch converted every thing into 
gold. 

Qaroline. Is that also a lesson of political economy ? 
I think, Mrs B. you have the art of converting every 
thing you touch into science. 

Mj^s B. It is not art, but the real nature of things. 
The story of king Midas shows, that gold alone does not 
constitute wealth, and that it is valuable only as it bears 
a due proportion to the more immediately useful pro- 
ductions of the earth. 

Caroline. But children will not be the wiser for such 
stories unless you explain their application to political 
economy. You must give them the tnoral of the fable. 

Mrs B. The moral is the only part of a fable which 
children never read 5 and in this they are perfectly right, 

26. How far does she think they ought to understand it ? 27. 

What work of Miss Edgeworth is mentioned containing useful les- 
sons on the subject? 28. What is there in the Cherry Orchard 

involving the principles of political economy ? 29. What other 

work upon the subject is reckoned suitable for children ? 30, 

What is the story of king Midas? 



INTRODUCTION. 21 

for a principle abstractedly laid down is beyond their 
comprehension. The application will be made as they 
advance in life'. Childhood is the period for sowing the 
seecl, not for forcing the fruit ; you must wait the due 
season if you mean to gatner a ripe and plentiful har- 
vest. 

Caroline. Well, my dear Mrs B., what must 1 do? 
You know that I am fond of instruction, and that f 
am not afraid of application. You may recollect what 
pleasure I took in the study of chemistry. If you could 
persuade me that political economy v/ould be as inter- 
esting, and not more difficult, I would beg of you to put 
me in the way of learning it. Are there any lectures 
given on this subject ? or could one take lessons of a 
master ? for as to studying scientific books, I am dis- 
couraged from the difficulty of the terras; when the 
language as well as the subject is new, there are too 
many obstacle? to contend with at first setting out. 

Mrs B. The language of the science is frequently 
its most difficult part, but in political economy therr^'- are 
but few technical terms, and those you will easily com- 
prehend. Indeed, you have already a considerable 
Steele of information on this subject, but your notions 
are so confused and irregular, such a mixture of truth 
and error, that your business will rather be to select, 
separate, and methodise what you already know, than 
to acquire new ideas. It is not in my power to recom- 
mend you a master on this subject, for there are none — 
perhaps because there are no pupils. Those who seek 
for instruction on political economy, read the works 
written on that science, particularly the treatise of Adam 
Smith. Lectures on political economy have occasionally 
been given at the universities, especially at Edinburgh, 
and many of the students there are well versed in this 
science, as they turn their attention to it at an age when 
the mind is not yet strongly biassed by prejudice. 

31. What remark is made of childhood relating to intellectual and 

moral improvement ? 82. Are there many technical terms in 

political economy ? 33. What works are usually read upon the 

subject ? 



22 INTRODUCTEON. 

Caroline. But what then am I to do, Mrs B. ? I 

cannot attend those lectures, and T fear I shall never 
have courage to undertake the study of treatises which 
appear to me so difficult. 

Mrs B. Perhaps I may be able to smooth the way 
for you. It has been my good fortune to have passed a 
great part of my life in a society where this science has 
been a frequent topic of discussion, and the interest I 
took in it has induced me to study its principles in the 
works of the best writers on the subject ; but I must tell 
you fairly, that I did not commence my studies by 
opening these works at random, or by consulting Adam 
Smith on an insulated point, before I had examined his 
plan, or understood his object. I knew that in order to 
learn 1 must begin at the beginning, and if you are of 
opinion that my experience can be of any service to 
you, and will be content to receive an explanation in a 
familiar manner of what has been discussed or investi- 
gated by men of acknowledged talent and learning, I 
will 'ditempt to guide you through the first elements of 
the .^ience, without, however, presuming to penetrate 
into its abstruse parts. 

Caroline. Well then, J am quite decided to make 
the attempt ; you are but too good to me, Mrs B., to 
allow me again to become your pupil. You have so 
much indulgence, however, that 1 am never afraid of 
exposing my ignorance by my inquiries, though I fear I 
shall put your patience to a severe trial. 

34. What advantages had Mrs B. for understanding this science ? 
35.^ How did she commence the study ? 



INTRODUCTION. 23 

CONVERSATION II. 

INTRODUCTION CONTINUED. 

Definition of Political Economy, — Rise and Progress 
of Society, — Connexion between Political Economy 
and Morality. — Definition of Wealth. 

CAROLINE. 

I HAVE been thinking a great deal of political econ- 
omy since yesterday, my dear Mrs B., but I fear not 
to much purpose ; at least I am no farther advanced 
than the discovery of the great confusion of ideas 
which prevails in my mind on the subject. That 
science seems to comprehend every thing, and yet I 
own, that I am still at a loss to understand what it is. 
Cannot you give me a short explanation of the nature 
of the science, that I may have some clear idea of it to 
begin with ? 

Mrs B. I once heard a lady ask a philosopher to 
tell her in a few words what is meant by political econo- 
my. Madam, replied he, you understand perfectly 
what is meant hy household economy; you need only 
extend your idea of the economy of a family to that of 
a whole people — of a nation, and you will have some 
comprehension of the nature of political economy. 

Caroline. Considering that he was limited to a few 
words, do you not think that he acquitted himself ex- 
tremely well ^ But as* I have little more patience than 
this lady, I hope you will indulge me with a more de- 
tailed explanation of this universal science. 

Mrs B. I would call it the science yvhich teaches 
us to investigate the causes of the wealth and prosperity 
of nations. 

36. Why did Caroline consider political economy a perplexing 

subject ? 37. What reply did the philosopher make to the lady 

who desired him to tell what is meant by the term political econo- 
my ? 38. ¥/hat definition does Mrs B. give ? 



24 INTRODUCTION. 

In a country of savages, you find a small number of 
inhabitants spread over a vast tract of land. Depending 
on the precarious subsistence afforded by fishing and 
hunting, they are frequently subject to dearths and fa- 
mines, which cut them off in great numbers : they rear 
but few children, for want destroys them in their early 
years : the aged and infirm are often put to death, but 
rather from motives of humanity than of cruelty, for the 
hunter's life requiring a great extent of country, and long 
and perilous excursions in quest of food, they would be 
wholly incapable of following the young and robust, and 
would die of hunger, or become a prey to wild beasts. 
As soon as these savages begin to apply themselves 
to pasturage, their means of subsistence are brought 
within narrower limits, requiring only that degree of 
wandering necessary to provide fresh pasturage for 
their cattle. Their flocks ensuring them a more easy 
subsistence, their families begin to increase ; they lose 
in a great measure their ferocity, and a considerable 
irapravement takes place in their character. 

B>j degrees the art of tillage is discovered, a small 
tract of ground becomes capable of feeding a greater 
relative number of people ; the necessity of wandering 
in search of food is superseded ; families begin to settle 
in fixed habitations, and the arts of social life are intro- 
duced and cultivated. 

In the savage state, scarcely any form of government 
is established ; the people seem to be under no control 
but that of their military chiefs in time of warfare. 

The possession of flocks and herds in the pastoral 
state introduces property, and laws are necessary for its 
security ; the elders and leaders therefore of these 
wandering tribes begin to establish laws, to violate which 
is to commit a crime, and to incur a punishment. This 

39. What account is given of a country wholly inhabited by 
savages ? — —40. What change takes place when savages give them- 
selves to pasturage ? 41. What further change takes place when 

they discover the art of tillage ? 42. What is said of govern- 
ment in a savage state ? 43. What is mentioned to be the 

origin of social order? 



INTRODUCTION. 25 

is the origin of social order ; and wiien in the third state 
the people settle in fixed habitations, the laws gradually 
assume the more regular form of a monarchical or re- 
publican government. B^ery thing now wears a new 
aspect ; industry flourislies, the arts are invented, the 
use of metals is discovered ; labor is subdivided ; 
every one applies himself more particularly to a distinct 
employment, in which he becomes skilful. Thus, by 
slow degrees, this people of savages, whose origin was 
so rude and miserable, becomes a civilized people, who 
occupy a highly cultivated country, crossed by fine roads, 
leading to wealthy and populous cities, and carrying on 
an extensive trade with other countries. 

Caroline. This is a very pleasing outline of the history 
of the rise and progress of civilization ; but I should 
like to see it a little more filled up. 

Mrs B. The subject you will find hereafter suffi- 
ciently developed ; for the whole business of political 
economy is to study the causes which have thus coope- 
rated to enrich and civilize a nation. This science is, 
therefore, essentially founded upon history, — not the his- 
tory of sovereigns, of wars, and of intrigues ; but the 
history of the arts, and of trade, of discoveries, and of 
civilization. We see some countries, like America, in- 
crease rapidly in wealth and prosperity, whilst others, like 
Egypt and Syria, are impoverished, depopulated, and 
falling to decay ; when the causes which produce these 
various effects are well understood, some judgment may 
be formed of the measures which governments have 
adopted to contribute to the welfare of their people ; 
whether such or such a branch of commerce should be 
encouraged in preference to others ; whether it be proper 

44. In what state of improvement does the monarchical or republi- 
can form of government commence? 45. What ultimately 

becomes the condition of this supposed people of Savages ? 

46. What does Mrs B. say is the whole business of political econo- 
my ? 47. On what is the science founded ? 48. What 

remarks are made in this place of Egypt and America, illustrative of 
the subject? 

3 



26 INTRODUCTION. 

to prohibit this or that kind of merchandise ; whether 
any peculiar encouragement should be given to agricul- 
ture ; whether it be right to establish by law the price 
of provisions or the price of labgr, or whether they should 
be left without control ; and so on. 

You see, therefore, that political economy consists 
of two parts — theory and practice ; the science and 
the art. The science comprehends a knowledge of 
the facts which we have enumerated ; the art relates 
more particularly to legislation, and consists in doing 
whatever is requisite to contribute to the increase of na- 
tional wealth, and avoiding whatever would be prejudicial 
to it. Mistakes in theory lead to errors in practice. 
When we enter into details, we shall have occasion to ob- 
serve that governments, misled by false ideas of political 
economy, have frequently arrested the natural progress of 
wealth when it was in their power to have accelerated it. 

Caroline. But since the world v^^as originally a rude 
wilderness, and yet has arrived at the improved state of 
civilization in which we now^ find it, the errors of go- 
verai^ent cannot have been very prejudicial. 

Mrs B. The natural causes which tend to develope 
the wealth and prosperity of nations are more powerful 
than the faults of administration which operate in a con- 
trary direction. But it is nevertheless true that these 
errors are productive of a great deal of mischief; that 
they check industry and retard the progress of improve- 
ment. Under bad .governments, particular classes of 
people are favored, others discouraged and oppressed : 
prosperity is thus unequally shared, and riches unfairly 
distributed. You look very grave, Caroline; do you be- 
gin to grow tired of the subject ? 

Caroline. Oh no; I think thus far I have understood 

49. Of how many parts does political economy consist? 50. 

What does the science comprehend ? 51 , To what does the art or 

practice relate ? 52. What is said of the natural causes which 

tend to develope the wealth and prosperity of nations ? 53. What 

is the condition of the people under bad governments ? 



IN'TRODUCTION. 27 

you; but before we proceed you must allow me to mention 
an objection which I confess distresses me ; if it is well 
founded I shall be quite at v^ariance with the maxims of po- 
litical economy, and that science will no longer retain any 
interest for me. I find that you are constantly talking of 
wealth ; of the causes which produce it ; of the means 
of augmenting it. To be rich, very rich, richer than 
other people, seems to be the great aim of political econ- 
omy. Whilst religion and morality teach us that we 
should moderate the thirst of gain, that inordinate love 
of wealth is the source of all crimes.' Besides that, it 
is very evident that the richest people are not always 
the happiest.^ Now, if wealth does not conduce to the hap- 
piness of individuals, how can it constitute that of nations ? 
A poor but vij^uous people are surely happier than a rich 
and vicious one. What remarkable examples do we not 
see of this in history. We are taught to admire the 
Greek republips, who despised the pomp and luxury of 
wealth. And then the Romans ; during the early part of 
their history they were poor and virtuous, but the acqui- 
sition of wealth depraved their character, and rendered 
them the slaves of tyrants. Now political economy ap- 
pears to me to induce the love of riches, and to consider 
it as the only end to be attained by government. 

Mrs B. This is a most alarming attack upon political 
economy ! When, however, you understand it better, 
you will find that your censure is unfounded. At present 
you must take my word for it, as I cannot show you the 
benefits arising from just principles of political economy, 
before you are acquainted with the principles themselves ; 
but I can assure you that they all tend to promote the 
happiness of nations, and the purest of morality. Far 
from exciting an inordinate desire of wealth or power, it 

54. What objection does Caroline raise as to a supposed inconsist- 
ency between the piinciples of political economy and those of 

Christianity? 55. What comparison does she make between rich 

and poor people? 56. Wha:t observation does i she make con- 
cerning ancient Greece and Rome ? 57. With what does Mrs 

B. tell Caroline she must be acquainted, before she" can comprehend 
the benefits of just principles of political economy ? 



28 INTRODUCTION. 

tends to moderate all unjustifiable ambition, by showing 
that the surest means of increasing national property 
are peace, security, and justice ; that jealousy between 
nations is as prejudicial as between individuals ; that 
each finds its advantage in reciprocal benefits ; and that 
far from growing rich at each other's expense, they mu- 
tually assist each other by a liberal system of commerce. 
Political economy is particularly inimical to the envious, 
jealous, and malignant passions; and if ever peace and 
moderation should flourish in the world, it is to enlighten- 
ed views of this science that we should be indebted for 
the miracle. 

But, my dear Caroline, I suspect that there is some 
error in your idea of riches. What do you call riches ? 

Caroline. Of course to be rich is to have a great in- 
come ; to be able to spend a great deal more than other 
people. 

Mrs B. You speak of the riches of individuals ; of 
comparative wealth. A rich man in one class of society 
might be poor in another. But this is not the definition 
that Tasked for — what do you understand by riches in 
general — in what does wealth consist ? 

Caroline. Oh, I suppose you mean money ? — I 
should say wealth consists in gold and silver. 

Mrs B. Consider what would be the situation of a 
country which possessed no other wealth than money. 
Do you recollect in what estimation Robinson Crusoe 
held his bag of gold when he was wrecked on a desert 
island ? 

Caroline. True ; but in an island which is not desert, 
money will purchase whatever you want. 

Mrs B. Then I should rather say that the things 
which we are desirous to procure with our money, such 

58, What does Mrs B. say is the moral tendency of this science ? 
-. 59. To what description of persons daes she say that politi- 
cal economy is particularly inimical? 60.' In what does Caro- 
line suppose riches to consist ? 61. How does Mrs B. convince 

Caroline that wealth does not consist in money ? 62. In what 

does Mrs B. herself represent riches to consist? 



INTRODUCTION. 20 

as land, houses, furniture, clothes, food, he. constitute 
riches ; and jiot the money by which they are obtained. 

Caroline. Certainly : these are clearly the things 
which constitute real wealth ; for unless we could pro- 
cure the necessaries of life with gold and silver, they would 
be of no use to us. 

Mrs B. We may therefore say that wealth compre- 
hends every article of utility, convenience, or luxury. 
This includes every object of our wishes which can be- 
come an article of commerce; such as landed estates, 
houses, the products of agriculture, those of manufac- 
tures, provisions, domestic animals, in a v.'ord, whatever 
can contribute to the welfare and enjoyment of men. 

Cai'oUne. Why should you confine you definition of 
wealth to things that can become articles of commerce ? 

Mrs B. Because there are many countries where 
the earth spontaneously produces things which can nei- 
ther be consumed nor sold ; and however valuable such 
things would be to us, could we obtain them, they cannot 
under those circumstances, be considered as wealth. 
The herds of wild cattle, for instance, which feed on 
the rich pastures called the Pampas, in South America, 
are of this description. Many of those large tracts of 
land are uninhabited ; and the cattle that range at large 
over them are of no value. Parties of hunters occasion- 
ally make incursions, and destroy some of them for the 
sake of their hides and fat ; whilst the flesh, which we 
should esteem most valuable, is either left to putrify, or 
is used as fuel to melt the fat for the purpose of tallow, 
which being transported to places where it can be sold 
and consumed, it acquires value and becomes wealth. 

In other parts of America, the grass of rich pastures 
is burnt on the ground, there being no cattle to consume 
it. 

63. Why did she confine her definition of wealth to such things as 

can become articles of commerce ? 64. What illustration of 

her position did she give from the herds of wild cattle in South 
America ? 65. And what one did she give from the rich pas- 
tures in some parts of North America ? 



30 INTRODUCTION. 

Caroiine. This may be the case in wild and uncul- 
tivated countries : but in those which are civilized, any 
land yielding unsaleable produce would be converted by 
the proprietor to some other use. 

Mrs B. I have heard that the fruit of many of the 
vineyards in France, was not gathered a few years ago, 
the grapes being so much reduced in value in conse- 
quence of a decree prohibiting the exportation of French 
wines, that the price at which they could be sold would 
not pay the expense of gathering them. In England, 
also, when all kinds of colonial produce were excluded 
from the continent of Europe, coffee is said to have 
been throw^n into the sea, because it would not pay the 
charges, on being landed. You see, therefore, that the 
effects of war or other circumstances, may for a time, 
in any country, destroy the value of commodities. 

Caroline. How very much you have already extend- 
ed my conception of the meaning of wealth ! And yet I 
can perceive that all these ideas were floating confusedly 
in my, mind before. In speaking of wealth we ought 
not t(yconfine ourselves to the consideration of the rela- 
tive wealth of individuals, but extend our views to what- 
ever constitutes riches in general, without any reference 
to the inequality of the division. 

All this is perfectly clear : no one can be really igno- 
rant of it ; it requires only reflection ; and yet at first I 
was quite at a loss to explain the nature of wealth. 

Mrs B. The confusion has arisen from the comm,6n 
practice of estimating riches by money, instead of obser- 
ving that wealth consists in such commodities as are use- 
ful or agreeable to mankind, of which gold and silver 
constitute but a very small portion. 

66. Whal further illustration did she give from the vineyards in 
jFrance ? 67. And what one from the plenty of coffee in Eng- 
land? 68. What remark does Caroline introduce in the close 

of the second conversation, as to the meaning of wealth ? 

69. From what does Mrs B. say that confusion as to the meaning 
of wealth had arisen? 



O:^ PROPERTY. 31 

CONVERSATION III. 

ON PROPERTY. 

About the origin of Wealth ; Legal institution of Pro- 
perty ; of ^landed Property; Security the result of 
Property ; Objections to landed Property answered ; 
Origin of JVations in a savage or pastoral life ; their 
progress in Agriculture ; Cultivation of Corn ; Reca- 
pitulation. * 

CAROLINE. 

Well, my dear Mrs B., since you have reconciled 
me to wealth, and convinced me how essential it is to the 
happiness and prosperity of nations, I begin to grow im- 
patient to learn wiiat are the best means of obtaining this 
desirable object. 

Mrs B. Do not leave everything to me, Caroline. 
I have told you that you were not without some general 
notions of political economy, though they are but ill 
arranged in your mind. Endeavor, therefore, to iinravel 
the entangled thread, and discover yourself what are the 
principal causes of the production of wealth in a nation. 

Caroline. I assure you that I have been reflecting a 
great deal upon the subject. I do not know v/hether I 
am right, but I think it is labor which is the cause of 
wealth. Without labor the earth would yield but very 
little for our subsistence. How insignificant are its spon- 
taneous productions compared with those derived from 
agriculture ! The crab with the apple ; the barren heath 
with the rich pasture of the meadow ! 

Mrs B. It is very true that labor is a most essential 
requisite to the creation of wealth, and yet it does not 
necessarily insure Jts production. The labor of the sav- 
age _who possesses no wealth is often more severe than 

70. What does Mrs B. tell Caroline to do, in the beginning of 

the third conversation? 71. What' does Caroline suppose is 

the first cause of wealth ? 72. What reason does she assign 

for this opinion ? 73. Is labor necessarily a cause of wealth ? 



32 ON PROPERTY. 

that of our common ploughman, whose furrows teem 
with riches. The long and perilous excursions of savages 
in search of prey, the difficulty which, from want of 
skill, they must encounter in every process of industry, 
in constructing the simplest habitations, fabricating the 
rudest im.plements ; — all concur to increase their toil. 
Labor is the lot of man ; whether in a barbarous or civ- 
ilized state, he is destined to earn his bread by the sweat 
of his brow. But how is it that in the one case labor 
is productive of great wealth, whilst in the other it affords 
barely the necessaries of life ? 

Caroline. You have observed that the labor of the 
savage is less advantageous on account of his ignorance 
and want of skill; besides, he works neither with the activi- 
ty and the zeal, nor with the perseverance of men in civil- 
ized society. Savages, you know, are proverbial for their 
idleness. 

Mrs B. Inducements must thenie found to rouse them 
from that idleness ; motives to awaken their industry and 
habituate them to regular labor. Men are naturally dis- 
posed/^to indolence ; all exertion requires effort, and ef- 
forts are not made without an adequate stimulus. The 
activity we behold in civilized life is the effect of educa- 
tion ; it results from a strong and general desire to share 
not only in the necessaries of life, but in the ' various 
comforts and enjoyments with which we are surrounded. 
The man who has reaped the reward, as well as under- 
gone the fatigues of daily exertion, willingly renews his 
efforts, as he thus renews his enjoyments. But the 
ignorance of a savage precludes all desires which do 
not lead to the immediate gratification of his wants ; he 
sees no possessions which tempt his ambition — no enjoy- 
ments which inflame his desires ; nothing less than the 

74. How does Mrs B. prove that it is not ? 75. What reply- 
does Caroline make to the question— why is not labor productive of 

wealth in a savage as well as in a civilized state ? 76. How 

is the natural disposition in man to indolence to be overcome ? 

77. Of what is the activity in civilized life the effect ? 78. Why 

does the savage desire to satisfy his immediate wants only ? 



ON PROPERTY. 33 

Strong impulse of want rouses him to exertion ; and, 
having satisfied the cravings of hunger, he lies down to 
rest without a thought of the future. 

Caroline. But if the desires of savages are so few 
and so easily satisfied, may not their state be happier 
than that of the laboring classes in civilized countries, 
who wish for so much, and obtain so little ? 

Mrs B. The brutish apathy which results from gross 
ignorance can scarcely deserve the name of content, and 
is utterly unworthy that of happiness. Goldsmith, in his 
Traveller, justly as well as beautifully observes, that 

" Every want that stimulates the bfeast 
Becomes a source of pleasure when redress'd." 

Besides it is only occasionally that a savage can indulge 
in this state of torpid indifference. If you consult any 
account of travels in a savage country, you will be satis- 
fied that our peasantry enjoy a comparative state of afflu- 
ence and even of luxury. 

But let us suppose a civilized being to come among a 
tribe of savages, and succeed in teaching some of them 
the arts of life — he instructs one how to render his hut 
more commodious, another to collect a little store of 
provisions for the winter, a third to improve the construc- 
tion of his bows and arrows ; what would be the conse- 
quences ? 

Caroline. One might expect that the enjoyment de- 
rived from these improvements would lead their coun- 
trymen to adopt them, and would introduce a general 
spirit of industry. 

Mrs B. Is it not more probable that the idle sava- 
ges would, either by force or fraud, wrest from the in- 
dustrious their hard-earned possessions ; that the one 

79. What inquiry does Caroline propose, as to the comparative 

happiness of the savage and civilized state? 80. What reply 

does Mrs B. make to this inquiry ? 81. What supposition does 

she make of a civilized person who takes up his residence with 

savages ? 82. Would the savages generally be likely to adopt 

the improvements which he taught a few of them ? 



34 ON PROPERTY. 

would be driven from the but be bad constructed with so 
much care, another robbed of the provisions he bad 
stored, and a third would see his well pointed arrows 
aimed at bis own breast. Here then is a fatal termina- 
tion to all improvement. Who will work to procure 
such precarious possessions, which expose him to dan- 
ger, instead of insuring his enjoyment ? 

Caroline. But all this would be prevented if laws 
were made for the protection of property. 

Mrs B. True but the right of property must be 
legally established, before it can be protected. For na- 
ture has given mankind every thing in common, and 
property is of human institution. It takes place in such 
early stages of society that one is apt to imagine it of 
natural origin ; but until it has been established by law, 
no man has a right to call any thing his own. 

Caroline. What, not the game he has killed, the 
hut he has built, or the implements he has constructed ? 
These may be wrested from him by force ; but he who 
thus obtains them acquires no right to them. 

Mrs B. When a man has produced any thing by 
his labor, he has no doubt, in equity, the fairest claim to 
it ; but his right to separate it from the common stock of 
nature, and appropriate it to his own use, depends en- 
tirely upon the law of the land. 

In the case of property in land, for instance, it is the 
law whidi decrees that such a piece of ground shall be- 
long to Thomas, such another to John, and a third to 
Jan:ies ; that these men shall have an exclusive right to 
the possession of the land and of its produce ; that they 
may keep, sell, or exchange it ; give it away during 
their lives, or bequeath it after their deaths. And in or- 
der that this law should be respected, punishments are 
enacted for those who should transgress it. It is not 

S3. Why would they not ? 84, But how could property under 

such circumstances be supported ? S5. How is everything given 

toman by nature ? 86. On what does one's right to property 

depend ? 87. How is one's right to a particular piece of land es- 
tablished ? 88. By what means are laws made effectual ? 



ON PROPERTY. 35 

until such laws have been made for the establishment 
and protection of property, of whatever description it be, 
that the right of property is established. 

Caroline. You astonish me ! I thought that property 
in land had always existed : I had no idea that it was a 
legal institution, but imagined that it had originated from 
the earliest period of the world. We read that in the 
time of the ancient patriarchs, when families became too 
numerous, they separated ; and that those who went to 
setde elsewhere, fed their flocks, and occupied the land 
without molestation. There was no one to dispute their 
right to it ; and after their deaths the children inhabited 
and cultivated the land of their fathers. 

If we were to found a colony in a desert island, every 
man w^ould cultivate as much ground as he wanted for 
his own use, and each having an equal interest in the 
preservation of his possessions, property" would thus be 
established by general agreement, without any legal in- 
stitution. 

Mrs B. This general agreement is a kind i3f law, 
a very imperfect one it is true, and which was perhaps 
originally founded on the relative strength of individuals. 
If one man attempts to carry off the cattle or the fruits 
of another the latter opposes force to force 5 if he is 
stronger or better armed, he either kills his antagonist 
or drives him away ; if weaker, he is despoiled, or he 
calls in his neighbors to his succor, shows ihem the 
common danger, and may induce them to unite with 
him in taking vengeance on the aggressor. 

Many incidents of this nature must occur before regu- 
lar laws are instituted ; that is to say, before a public 
authority is established, which shall protect individuals 
against those who attack them, and punish the offenders. 
It is then only that a man may say, " This is my field ; 

89. What case did Caroline mention, as evidence that individual 

right to landed estate had always existed ? 90. What supposition 

did she make concerning the establishment of a colony in a desert 

island illustrative of her views on this subject ? 91. What reply 

did Mrs B. make to this case ? 



36 ON PROPERTY. 

this is my house ; this seed which I cast into the ground 
will bring forth an abundant harvest, which will be all 
my own ; these trees, which I plant, will every year 
yield fruit, v/hich I alone shall have a right to gather." 

Caroline. 1 now comprehend perfectly the advan- 
tage of such laws — it is security — before they were es- 
tablished, the strong might wrest everything from the 
weak ; and old men, women, and children who had no 
means of defence, were exposed to their rapine and vio- 
lence. The idle and improvident, when in want of 
subsistence, became the natural enemies of the labori- 
ous and industrious. So that without this law the men 
who had toiled hardest would be most likely to fall vic- 
tims to those who had done nothing. In a word, the 
wasps would devour the honey of the bees. 

Mrs B. Yes, security is the grand point ; it is se- 
curity which stimulates industry, and renders labor pro- 
ductive ; every step towards security, is a step towards 
civilizati>on, towards wealth, and towards general happi- 
ness. ^ 

Caroline. All this is very true ; yet an objection to 
the institution of landed property has just occurred to 
me, which appears of considerable importance. Before 
land became private property, the earth, you say, was 
possessed in common by all mankind ; every one had 
an equal claim to it. But the law which institutes land- 
ed property takes it from mankind at large to give it to 
a few/individuals ; in order therefore to make some men 
rich, it makes others poor. Now what right has the 
law^ to dispossess some in order to enrich others ? It 
should be just before it is generous. 

This objection, however, does not extend to any other 
than landed property 5 nothing is more fair than that 
men should gather the fruits of their labor ; that they 
should possess the houses they have built, the goods 

92. What advantage does Caroline now discover in the civil laws 
of well organized society ? 93. What stimulates industry, and ren- 
ders labor productive ? 94. What objection does Caroline suggest 

concerning the existence of landed property ? 



ON PROPERTY. 37 

they have fabricated ; but the land cannot become pri- 
vate property vv-iihout injury to others who are thus de- 
prived of their natural right to it. 

Mrs B. You would then secure to every one the 
possession of the wealth he may acquire, though you 
would refuse him the means of producing it "i You would 
make him master of his house, but take away the 
ground on which it stands ; protect his harvests, but not 
allow him the property of a field in which he may raise 
his crops I 

Caroline. I must confess that you have placed my 
objection rather in a ridiculous point of view ; but that 
is not enough, Mrs B. ; you must show me that it is 
erroneous before I can consent to relinquish it. 

Mrs B. In countries newly occupied, grants of land 
are made to those who are willing to reclaim it from a 
state of nature, and the great inequality that we witness 
in more modern times is the result of voluntary transfers 
from one individual to another, by gifts, by bequests, or 
by sale ; it is the necessary consequence of that freedom 
and that security of which we have just seen the origin. 

Nature in some instances bestows her gifts with un- 
bounded and inexhaustible profusion ; it is thus she has 
given us air and water, which are alike possessed and 
enjoyed by all. But when she confers her donations 
whh a more sparing hand, as is the case with land, the 
advantage of all requires that guardians should be ap- 
pointed to protect and cherish so valuable a gift ; and in 
order that they may have the strongest possible interest 
in its culture and improvement, they become proprietors, 
with all the advantages attached to exclusive possession. 

The institution of property in land, augments the 
Vi^ealth not only of the proprietors, but likewise of all 
other classes of men. 

Land may be considered as the instrument by which 
alone wealth is created ; and we have just seen that the 



95. What reply does Mrs B. maks;! to this objec ioi ? 96. How 

are grants of land made ? 97. What is said of the bountiful and 

the sparing manner in which nature bestows her gifts ? 



3S ON PROPERTY. 

security of its possession gives life and vigor to indus- 
try ; it is this security which raises the condiiion of our 
peasantry so much above that of a savage people who 
possess the land in common. 

Caroline. An institution of such evident and general 
utility cannot then be considered as unjust. 

Mrs B, Certainly not. It is by the test of general 
utility that the justice of all laws should be tried ; for 
there are none which do not impose some restraint on 
the natural liberty of man, and which, in that point of 
view, might not be deemed objectionable. But without 
the control of laws we have seen that neither the lives, 
the property, the reputation, nor even the liberty of men 
are secure ; we sacrifice therefore some portion of that 
liberty to the law ; and, in return, it secures to us the 
remainder, together with every blessing which security 
can give. Blackstone, in his Commentaries says, 
" Every man, when he enters into society, gives up a 
part of hi^ natural liberty, as the price of so valuable a 
purchase ; and in consideration of receiving the advan- 
tages of mutual commerce, obliges himself Xo conform 
to those laws which the community has thought proper 
to establish. For no man who considers a moment 
would wish to retain the absolute and uncontrolled pow- 
er of doing whatever he pleases, the consequence of 
which is, that every other man would also have the same 
power, and there would be no security to individuals in 
any of the enjoyments of life : political, therefore, or 
civnl liberty, which is that of a member of society, is no 
other than natural liberty, so far restrained by human 
laws (and no farther) as is necessary and expedient for 
the general advantage of the public. 

" That constitution or form of government, that sys- 
tem of laws, is alone calculated to maintain civil liberty, 
which leaves the subject entire master of his own con- 

9S. Wha< is the instrument by which weahh is created ? 99. 

How should the justice of alllaws be tried ? 100. What is the sub- 
stance of the quotation from Blackstone, concerning natural and 

political lights ? 101. What constitution or form of government, is 

alone calculated to maintain civil liberty. 



ON PROPERTY. 39 

duct, except in those points wherein the public requires 
some direction or restraint." 

Caroline. You have completely removed all my 
scruples respecting the institution of landed property, 
Mrs B. — let us now therefore return to the progress of 
wealth and civilization. 

Mrs B. We must not proceed too rapidly ; for the 
progressive steps in the history of civilization are ex- 
tremely slow, and we must learn to view the develope- 
ment of human industry in successive and almost insen- 
sible degrees. 

Civilized nations do not always originate from the set- 
tlement of a colony ; they frequently arise from a savage 
state, in which they may remain during a course of cen- 
turies. It was in this state we found the Indians on the 
discovery of America ; they were mere hunters ; and so 
long as men behold an unlimited space before them, in 
which they may wander without obstacle or control, it 
is difficult to conceive any circumstances which should 
lead them to adopt a setded mode of life, and apply them- 
selves to tillage. 

In countries abounding with large plains, the pastoral 
mode of life has prevailed ; but for this purpose there 
must have been established property in cattle, though 
the land were possessed in common. Such was the 
case with the ancient Scythians who inhabited the vast 
plains of Tartary, and with the modern Tartars and 
-Arabs, who, to this day, are wandering tribes, and, like 
the patriarchs of old, live in tents, and travel about with 
their flocks and herds in search of pasture. 

We have observed that men were by nature disposed 
to idleness, and this disposition's necessarily a great ob- 
stacle to the introduction of agriculture ; for it requires 
a considerable degree of foresight and knowledge, and 

102. What was the condition of the American Savages when the 

country was first discovered by Europeans ? 103. What is said 

of the ancient Scythians and the modern Tartars and Arabs ? 

104. What is mentioned as a natural obstacle to agriculture ? 



40 



ON PROPERTY. 



a firm reliance on the security of property, to labor at 
one season in order to reap the fruits at another. But 
we may suppose agriculture to be a progressive step 
from pastoral life ; that a tribe of shepherds may have 
met with enemies in their wandering excursions, and the 
apprehensions of losing their flocks may have induced 
them to settle ; they would probably choose a spot de- 
fended by nature from attacks of wild beasts, or the in- 
cursions of savage neighbors. Thus Cecrops pitched 
upon the rock on which the citadel of Athens is founded, 
to build a town. Or they may have been tempted by 
the attractions of some fruitful spot, under the protection 
of a neighboring government able to defend them. Vol- 
ney, in his account of the wandering tribes in Syria, 
says : " As often as they find peace and security, and a 
possibility of procuring sufficient provisions in any dis- 
trict, they take up their residence in it, and insensibly 
adopt a settled life and the arts of cultivation." These 
arts they; must have attained by very slow degrees — 
they observed that fruit trees may be multiplied ; that 
nutritious plants may be propagated ; that there are 
seeds which reproduce every year ; and that a great 
variety of animals may be tamed and domesticated. 
Thus supplied with a, new fund of subsistence, their chil- 
dren are better fed, their families increase, and age and 
infancy are protected and provided for. 

But these people are yet acquainted with only the 
first elements of agriculture ; how many fortunate chances 
must have occurred before they reached the important 
era of the cultivation of corn ! Wild corn has nowhere 
been found, and the Greeks imagined that a divinity de- 
scended on earth, to introduce it, and to instruct them 
in the cultivation of this valuable plant. Athens, Crete, 

105. In what manner is it supposed, that persons may g;o from a 

pastoral life, to agriculture ? 106. What is mentioned of decrops, 

illustrative of this supposition ? 107. What account is given of 

the wandering tribes of Asia, by Volney ? 108. What opinion 

did thq Greeks' entertain concerning the first cultivation of corn. ? 



ON PROPERTY. 41 

Sicily and Egypt, all claim the merit of being the origi- 
nal cultivators of corn ; but whoever are the people to 
whom we are indebted for this important discovery, or 
whatever are the means by which it was accomplished, 
there is none which has had so great an influence on the 
welfare of mankind. Feeble as it appears, this plant can 
resist the summer's heat and the winter's cold. It flou- 
rishes in almost every climate, and is adapted not only 
for the food of man, but for that of a great variety of do- 
mestic animals, and it yields by fermentation a pleasant 
and salubrious beverage. The grain will keep many 
years, and affords such a durable means of subsistence, 
that danger could no longer be apprehended in trusting 
to futurity, and plenty was secured during the longest 
and most unproductive winters. 

But the cultivation of this inestimable plant cannot be 
undertaken without considerable funds, fixed habitations, 
implements of husbandry,* domestic animals ; in a word, 
establishments which could neither be created nor main- 
tained without the institution of property. Savages 
have no corn, no cultivation, no domestic animals; they 
consume and destroy every thing without considering 
reproduction ; — and how different are the results ! We 
now see millions of men and animals inhabiting an ex- 
tent of country which would scarcely have sufficed for 
the maintenance of two or three hundred savages. 



^ These are at first of a very rude and imperfect construction. 
In some parts of India the plough of a Hindoo, even to this day, is 
formed of a crooked stick very inartificially sharpened, and not un- 
frequently drawn by his wife. The use of domestic animals in agri- 
culture is another step toward civilization ; but no farming estab- 
lishment whatever could either be created or maintained without 
the institution of property. 

109. What nations claim for themselves the honor of being the 

first cultivators of it ? 1 10. What circumstances make corn very 

valuable ? 111. What is necessary in order to the cultivation of 

corn ? — ^112. What is said in the note, of the use of the plough in 

India? 113. What comparison is made, as to the number of 

persons which can be supported in a savage or civilized state in the 
same extent of country ? 
4* 



42 ON PROPERTY, 

Caroline. Let us rest a little, my dear Mrs B. ; I am 
almost bewildered with the number and variety of ideas 
that you have presented to my mind. 1 wonder that 
these things never occurred to me before ; but I have 
been so accustomed to see the world in its present im- 
proved state, that my attention was never drawn to the 
many obstacles and difficulties it must have encountered, 
and the laborious progressive steps it must have^made 
before society could have attained its present state of 
perfection. 

Mrs B. Perfeqtion ! comparatively speaking, I sup- 
pose you mean ; for it is not long since you were ma- 
king lamentable complaints of the actual state of society ; 
in which indeed I could not entirely agree with you, 
though I think that we are still far removed from per- 
fection. But let us continue to trace the progress of 
wealth and civilization up to their present state, before 
we begin to find any fault with existing institutions. 

Caroline. I think 1 have now a very clear idea of 
the important consequences which result from the es- 
tablishment of property. It puts an end to the wander- 
ing hfe of barbarians, induces men to settle, and inures 
them to regular labor ; it teaches them prudence and 
foresight ; induces them to embellish the face of the 
earth by cultivation ; to multiply the useful tribes of 
animals and nutritious plants; and in short, it enables 
them so prodigiously to augment the stock of subsistence, 
as to transform a country which contained but a few 
poor huts and a scanty population into a great and 
wealthy nation. 

- 114. Does Mrs B. think that civil institutions as they now exist 
are perfect ? 



ON PROPERTY. 43 

' CONVERSATION IV. 

ON PROPERTY CONTINUED. ^ 

Effects of insecurity of property. — Examples from Fol- 
ney's Travels. — Objections raised against civiliza- 
tion. — State of Bcetica from Telemachus. — Objections 
to community of goods. — Establishment of Jesuits in 
Paraguay. — Moravians. — State of Sivitzcrland. — 
Advantages resulting from the establishment and se- 
curity of property. 

Mrs B. Now that we have traced the rise and pro- 
gress of civilization to the security of property, let us 
see whether the reverse, that is to say, insecurity of 
property in a civilized country, will not degrade the 
state of man, and make him retrace his steps till he 
again degenerates into barbarism. 

Caroline. Are there any examples of a civilized 
people returning to a savage state ? I do not recollect 
ever to have heard of such a change. 

Mrs B. No, because when property has once been 
instituted, the advantages it produces are such, that it 
can never be totally abolished ; but in countries where 
the; tyranny of government renders it very insecure, the 
people invariably degenerate, the country falls back into 
poverty, and a comparative state of barbarism. We 
have already noticed the miserable chEfnge in the once 
wealthy city of Tyre. Egypt, which was the original 
seat of the arts and sciences, is now sunk into the most 
abject degradation; and if you will read the passages I 
have marked for you in Volney's travels, you will find 
the truth of this observation very forcibly delineated. 

: 1 — 

115. What does Mrs B. propose to show in this conversation ? 

116. What question is proposed in reply by Caroline? 117. 

What is the reason that no civilized people have returned to a bar- 
barous state ? lis. What is the consequence in this respect 

v^here the tyranny of the government renders property insecure f 
119. What countries are mentioned as instances of this ? 



44 ON PROPERTY. 

Caroline reads. " When the tyranny of a govern- 
ment drives the inhabitants of a village to extremity, the 
peasants desert their houses, and withdraw with their 
families int6 the mountains, or wander in the plains. It 
often happens that even individuals turn robbers in order 
to withdraw themselves from the tyranny of the laws, 
and unite into little camps, w^hich maintain themselves 
by force of arms ; these increasing'become new hordes 
and new tribes. We may say, therefore, that in cultiva- 
ted countries the wandering life originates in the injus- 
tice or want of policy of the government." 

M7's B. This, you see, is very much to the point ; 
but here is another passage equally applicable. 

Caroline reads. " The silks of Tripoli are every day 
losing their quality from the decay of the mulberry-trees, 
of which scarcely any thing now remains but some hol- 
low trunks. Why not plant new ones ? That is a Eu- 
ropean observation. Here they never plant; because 
were they either to build or plant, the pacha would say 
this man has moifey, and it would be extorted from 
him." 

Besides, where there is so little actual security, what 
reliance can be placed on futurity ? What reason would 
the proprietors have to hope that the mulberry-trees 
would ev^er repay them for the trouble and expense of 
planting them ? Yet I w^onder that the government of the 
country should not, for its own sake, encourage the in- 
dustry of its subjects. 

Mrs B. In the w^retched government of the Turks, 
every thing is so insecure, from the life and property of 
the sovereign, to that of the lowest of his subjects, that 
no one looks to futurity, but every man endeavors to 
grasp at, and enjoy what is immediately within his 
reach. The fcijlowing passage will show you what 
sufferers they all are by such a mistakeu system of 
policy. 

120. What does Volney say upon this subject?- 121, What 

does he say of the silks of Tripoli ? 122. What is the condition 

of property generally in Turkey ? 



ON PROPERTY. 45 

Caroline reads. " In consequence of the wretch- 
edness ofthe government, the greater part of the pacha- 
lics are impoverished and laid waste. In tlie ancient 
registers of imports, upwards of 32O0 villages were reck- 
oned in that of Aleppo, but^&t present the collector can 
scarcely find 400. Such of our merchants as have re- 
sided there twenty years, have themselves seen the great- 
er part ofthe environs of Aleppo become depopulated. 
The traveller meets with nothing but houses in ruins, cis- 
terns rendered useless, and fields abandoned.' Those 
who cultivated them are fled into the towns, where the 
population is absorbed, byt where at least the individual 
conceals himself among the crowd from the rapacious 
hands of despotism. In other countries the cities are in 
some measui-e the overflow of the population of the 
country ; in Syria they are the effect of its desertion. 
The roads in the mountains are extremely bad, as the 
inhabitants are so far from levelling them that they en- 
deavor to render them more rugged, in order, as they 
say, to cure the Turks of their desire to introduce their 
cavalry. 

" The pacha may applaud himself for penetrating into 
the most secret sources of private property, but what 
are the consequences ? The people, denied the enjoy- 
ment ofthe fruits of their labor, restrain their industry to 
the supply of their pecessary wants ; the husbandman 
sows only to prevent himself from starving, the artificer 
labors only to maintain his fannly ; if he makes any 
savings he strives to conceal them. The people live 
therefore in poverty and distress, but at least they do 
not enrich their tyrants, and the rapacity of despotism is 
its own punishment. " 

Mrs B. The degeneracy of the mighty Persian and 
Indian monarchies since the conquest of those countries 

123. What was the former number of villages in the environs of 

Aleppo? 124. Wha t is the present number .' 125. What is 

the state of the roads in Syria ? 126, Why do the common people 

in Turkey labor so little ? 



46 ON PROPERTY. 

by the Mahometans, is also clearly deducible from the 
insecurity of property, and affords the most tremendous 
examples of national decline. Trott, in his History of 
Hindostan, informs us that during the disastrous times of 
the latter monarchs of India, the cruelties and oppres- 
sions of the agents of government were such that the 
farmers burnt their houses, utensils, and crops, and took 
refuge in the woods and mountains, where those who 
could neither excite charity nor maintain themselves by 
the sword, perished through want. 

Caroline. What a melancholy picture this is, my 
dear Mrs B. ! — it is, I think, even more painful to con- 
template than the wretchedness of savages ; for to their 
actual misery these people must add the regret of hav- 
ing known belter times. 

Mrs B. Dr Clarke's Travels abound with similar 
instances of insecurity of property, and legal oppression, 
which subvert society, and degrade the human species. 
" In Circassia," he observes that " the sower scattering 
seed, or the reaper who gathers the sheaves, are con- 
stantly liable to an assault ; and the implements of hus- 
bandry are not more essential to the harvest than the 
carbine, the pistol, and the sabre." 

Speaking of the Isle of Cyprus, he says : " The soil 
everywhere exhibited a white marly clay, said to be 
exceedingly rich in its nature, although neglected. The 
Greeks are so oppressed by their Turkish masters, that 
they dare not cultivate the land; the harvest would in- 
stantly be taken from them if they did. Their whole 
aim seems to be, to scrape together barely sufficient, in 
the course of the whole year, to pay their tax to the 
governor. The omission of this is punished by torture 
or by death ; and in case of their inability to supply the 
impost, the inhabitants fly from the island. So many 

127. What does Trott say of the condition of Hindostan ? 128. 

What other traveller has given other similar accounts ? 129. 

What does Dt Clarke say of Circassia ? 130. ¥/hat does he say qf 

the isle of Cyprus ? 



ON PROPERTY. 47 

emigrations of this sort happen during the year, that the 
population of Cyprus rarely exceeds 60,000 persons, a 
number formerly insufficient to have peopled one of its 
towns." 

Caroline. You have made me sensible of the ad- 
vantages of civilization ; but yet I confess that my mind 
is not fully satisfied. Is there no medium between a 
savage life and the extreme inequality of condition which 
we see in the present state of society? Can we not 
have conveniences without luxuries ; plenty without su- 
perfluity ? I think I have met with an example of such 
a people, Mrs B. ; but I dare not venture to mention my 
authority, as you have once before rejected it, 

Mrs B. If you allude to Telemachus, there are 
many sound doctrines of political economj^ in that v/ork ; 
though it must be acknowledged that it is not free from 
error. But let me hear the sentiments of Fenelon on 
this subject. 

Caroline. Do you remember that delightful picture 
which he draws of the inhabitants of Boetica ? There is 
an irresistible charm in the description of their happi- 
ness ; and if fabulous, it is certainly meant at least to 
delineate what ought to constitute the happiness of na- 
tions ; equality, community of goods, but {ew arts and 
few wants ; an ignorance or contempt of luxury, and 
manners perfectly conformed to tlie simplicity of nature. 
I must read you the passage, and you will tell me wheth- 
er it is not a satire on political economy : — 

" They live in common without any partition of lands, 
the head of every family is its king. They have no 
need of judges, for every man submits to the jurisdic- 
tion of conscience. They possess all things in common ; 
for the cattle produce milk, and the fields and orchards 
fruit and grain of every kind in such abundance, that a 
people so frugal and temperate have no need of property. 

131. What is the mimber of inhabitants there ? 132. To what 

what work does Caroline allude in reply to this statement of Mrs B ? 

133. Of the inhabitants of what place does Telemachus give an 

account? 134. What is this account ? 



48 ON PROPERTY. 

They have no fixed place of abode ; but when they 
have consumed the fruits, and exhausted the pasturage, 
of one part of the paradise which they inhabit, they re- 
move their tents to another ; they have, therefore, no 
opposition of interest, but are connected by a fraternal 
affection which there is nothing to interrupt. This 
peace, this union, this liberty, they preserve by reject- 
ing superfluous wealth, and deceitful pleasures ; they 
are all free, they are all equal. 

" Superior wisdom, the result either of long experi- 
ence or uncommon abilities, is the only mark of distinc- 
tion aniong them ; the sophistry of fraud, the cry of vio- 
lence, the contention of the bar, and the tumult of bat- 
tle, are never lieard in this sacred region, which the 
gods have taken under their immediate protection ; this 
soil has never been distained whh human blood, and 
even that of a lamb has rarely been shed upon it. When 
we first traded with these people, we found gold and 
silver used for ploughshares ; and, in general, employed 
promiscuously with iron. As they carried on no foreign 
trade, they had no need of money ; they were almost 
all, either shep.berds or husbandmen ; for as they suf- 
fered no arts to be exercised among them, but such as 
tended immediately to answer the necessities of life, the 
number of artificers was consequently small : besides, a 
greater part, even of those that live by husbandry, or 
keeping of sheep, are skilful in the exercise of such arts 
as are necessary to manners so simple and frugal." 

Mrs B. This, my dear Caroline, is a representa- 
tion of what the poets call the golden age, and requires 
only truth to make it perfect. If it were an historical 
account, all the conclusions you deduce from it would be 
just ; but it is fiction, which you must allow makes an 
essential difference. 

Supposing that this earth v/ere a paradise, and yielded 

135. What is the only mark of distinction among; the inhabitants ? 

136. What is said of the use of gold among them ?■ 137. 

What does Mia B. sav of this account of Telemachus ? 



ON PROPERTY. 49 

spontaneously all that is now produced by cultivation ; still 
without the institution of property it could not be enjoyed ; 
the fruit would be gathered before it was ripe, aninrials 
killed before they came to maturity ; for who would pro- 
tect what was not their own ? or who would economize 
when all the stores of nature were open to him ? There 
would be a strange mixture of plenty, waste, and- famine. 

In this country for instance, where the only common 
property consists in hedge-nuts and blackberries, how 
seldom are they allowed to ripen? In some parts of 
Spain, where the beauty of the climate produces a con- 
siderable quantity of good wild fruit, it is customary for 
the priest to bestow a blessing upon it before any is al- 
lowed to be gathered, and this ceremony is not perform- 
ed till the fruit is considered to be generally ripe ; by 
which means it is prevented from being prematurely 
gathered. It is with the same view that our game laws 
prohibit shooting, till the season when the birds have at- 
tained their full growth. 

Caroline. But though the BoBticans had all their 
goods in common, they were not without laws for pro- 
tecting them. 

Mrs B, The earth is not a paradise, and will not 
spontaneously yield its produce in abundance ; and if it 
were possessed in common ; who would set about culti- 
vating this or that spot of ground ? Government must 
allot to every man his daily task, and say to one you 
must work in this spot ; to another you must work in 
that. Would these men labor with the same activity 
and zeal as if they worked on their account — that is to 
say, received wages equivalent to their exertions ? Cer- 
tainly not. Such a system would transform indepen- 
dent men into slaves, into mere mechanical engines. 

138. What supposition does Mrs B. make in reply to this account ? 

139. What does she say of the only common property in Great 

Britain ? 140. How is wild fruit in Spain kept from being prema- 
turely gathered ? 141. What is said of the game laws in Great 

Britain ? 142. What difficulties would be found to exist, if the 

earth were possessed in common ? 
5 



50 ON PROPiERTY. 

There would be no inequality of condition it is tiue^ 
but the earth would not yield one tenth part of its ac- 
tual produce, the population would necessarily, be di- 
minished in the same propordon, and if all escaped the 
distresses of poverty, none would enjoy the acquisition 
of riches, an enjoyment which, when derived from the 
exercise of our talents and our industry, is a just and 
virtuous feeling ; it raises men not only in the scale of 
wealth, but in that of the power of doing good, of en- 
larging the sphere of human knowledge, with all the in- 
estimable benefits v./hich result from. it. 

There have, however, really existed establishments 
founded on a community of goods. That of the Jesuits 
in Paraguay was of this description. The influence of 
religion enabled these priests to exercise a despotic sway 
over the poor Indians whom they had converted to Chris- 
tianity ; it must be allowed that they tempered their pow- 
er by a patriarchal care of their docile subjects. Such a 
species of government might perhaps be well adapted to 
a tribe of ignorant uncivilized Indians, but it would never 
make a free, a happy, an independent, and a wealthy 
people. I must again repeat it, the industry of man re- 
quires the stimulus of exclusive possession and enjoy- 
ment ; and will always be proportioned to the personal 
advantage which he derives from it. 

There is, indeed, still existing a sect of the same de- 
scription, called iJoravians, but it is their religious tenets 
alone which enable them to keep up such an artificial 
system of communiiy, and it should be compared rather 
to a convent of monks and nuns than to a great nation. 

Caroline. I find I must give up the point of commu- 
nity of goods; but still 1 cannot help thinking that the 
great inequality of conditions which exist in the present 
state of society, is a serious evil. 

143, When is the enjoyment of riches a just and virtuous feel- 

ing?- 144. What estabUshments have existed founded on a 

community of interests ? 145, What is said of such a species of 

government ? 146. What is said of the Moravians ? 



ON PROPERTT. 51 

In Switzerland, where there is much less inequality of 
fortune than in this country, I have often admired and al- 
most envied the innocent and simple manners of the peo- 
ple. They seem not to know half our wants, not to 
suffer half our cares. 

Mrs B. The Swiss are governed by mild and equi- 
table laws, which render them a virtuous and a happy 
people ; and if they are not a rich and populous nation, 
it proceeds not from any Jivant of industry, but from the 
obstacles opposed both to agriculture and trade by the 
nature of their country ; for they are on the contrary 
uncommonly active and enterprising. I have often seen 
rpen carry on their shoulders baskets of manure up steep 
ascents inaccessible to beasts of burthen, and this for the 
purpose of cultivating some litde insulated spot of ground, 
which did not appear worth any such labor. The country 
women wear their knitting fastened round their waists, 
in order to have it at hand to fill up every litde interval 
that occurs in their domestic employments. If a Swiss 
woman goes to fetch water from the fountain, or faggots 
from the wood, her burthen is skilfully poised on her 
head, whilst her fingers busily ply the needles. But in- 
dustrious as they are, the resources of the country are 
too limited to enable a father of a family to provide for 
all his children ; some of them are therefore obliged to 
emigrate, and seek their fortune in a foreign land, which 
offers greater resources to their industry. Hence the 
number of Swiss merchants, governeses, shopkeepers, 
and servants that are to be met with in almost all coun- 
tries : would not these people be happier if they foimd 
means of exercising their industry and their talents in a 
country to which they are all so much attached, and 
which they have so much reason to love ? In the 
energy of youthful vigor men may often quit their own 

147. What is said of the condition of the Swiss ? 148. What 

is said of the hard labor of the men .'- — —149. What is said of the 

industry of the Swiss women ? 150. What obstacles are in the 

way to happiness with the Swiss ? 



52 ^ ON PROPERTY. 

country, and live happily in a foreign land ; but inquire 
of the parents who are on the point of separating from 
their children as soon as they have attained the hope- 
ful age of manhood, whether their country would be less 
happy for offering them the means of employment and 
maintenance at home. 

The Swiss cannot afford to support a standing army 
for the defence of their territory ; they are therefore un- 
der the necessity of engaging l^eir troops in the service 
of foreign potentates, in order to provide for a part of 
their population, and to have a resource by calling them 
home in times of danger. Would not these soldiers be 
happier in defending their own country, than in shedding 
their blood as mercenaries in the cause of foreigners ? 
We have a remarkable proof of it, in the effect which 
their patriotic songs are said to produce on them ; when 
these simple airs recall to their minds their beloved and 
regretted country, it either drives them to desertion, or 
renders their lives miserable ; and so deep is the impres- 
sion made by these nationalairs, that it was found neces- 
sary to forbid their being sung by the troops in foreign 
service. 

Caroline. There is no withstanding your attacks, 
Mrs B. — you drive me from all my strong holds. 1 ex- 
pected to have found a safe asylum in the mountains of 
Switzerland, I see that I must once more take refuge in 
London, where I am sure you will admit that the con- 
trast between the luxuries of the rich and the wretched- 
ness of the poor is shocking to every person of common 
feeling. 

Mrs B. If the wretchedness of the poor were the 
effect of the luxuries of the rich, 1 should certainly agree 
with you on that point ; but I believe it to be otherwise. 
However, as the people, whose progress towards wealth 

151. Why do the Swiss engage their troops in the service of foreign 

powers ? 152. What is said to cause their soldiers to desert ? 

153. What is the reply of Mrs B. to the suggestion of Caroline, 

that the wretchedness of the poor in London is caused by individual 
rights ? 



.'■■'3 

i 



^ 



ON THE DIVISION OF LABOR. 53 

and civilization we have been tracing in our two last con- 
versations, are yet far from being sufficiently advanced 
in their career to be guilty of any great excess in luxury, 
we must patiently follow them in their advancement in 
knowledge and the acquisition of wealth before we treat 
of the subject of luxury. 



CONVERSATION V. 

ON THE DIVISION OF LABOR. 

Origin of Barter. — Division of Labor, — Extracts from 
Smithes Wealth of Nations on the division of Labor. 
Advantages of Machinery. — Effects of the Division 
of Labor on the morals and intellects of the people. 
— Recapitulation. 

MRS B. 

We have ascertained that the establishment and secu- 
rity of property were the chief causes of the emancipa- 
tion of mankind from the shackles of sloth and ignorance ; 
but there are other subordinate causes which tend great- 
ly to promote the progress of industry and civilization. 
The first of these is the introduction of exchange or bar- 
ter. 

We observed that when men found they could place 
a reliance on the security of their possessions, they la- 
bored with redoubled activity, and far from being sat- 
isfied with a scanty and temporary maintenance, they 
provide for the future, they accumulate a little store not 
only of the necessaries, but of the comforts and conve- 
niences of life. The one has a stock of arrows for the 

154. What have been mentioned as the chief causes of the eman- 
cipation of mankind from the shackles of sloth and ignorance ? 

155. What is mentioned first as a subordinate cause ? 156. What 

account is given of the manner in which barter or exchange is first 
cai'ried on among savages ? 
5* 



54, ON THE DIVISION OF LABOR. 

chace, another of provisions for the winter, a third of 
clothes or ornaments for his person. They will remain 
in undisturbed possession of this little property ; but those 
who can no longer obtain it by force or fraud will en- 
deavor to procure it by other means. In the hunting 
season they will apply to the fabricator of arrows ; but 
they will not go to him with empty hands ; they must 
be provided with something to offer in exchange for the 
arrows, something which they think will tempt him to 
part with them ; whilst those who have nothing to give 
in return, must go without the arrows, how much soever 
they may stand in need of them. 

Here then is a new incitement to a spirit of industry. 
Whoever has accumulated more than he wants of any 
article, may find means of exchanging the surplus for 
something that will gratify other desires. As objects of 
desire increase, the wish to possess and the efforts to 
obtain them increase also ; and the industry of man is 
exerted either in producing them himself, or in produ- 
cing something by means of which he may obtain them. 
Thus the torpid apathy and languid indolence of a sav- 
age, yields to the curiosity, the admiration, the desire, 
the activity, and industry of a civilized being. 

The man for instance, who first cultivates a litde spot 
of ground, may be said to produce in time a general har- 
vest ; not only by introducing the artoftillage, but by the 
powerful impulse which it gives to industry in general. 
He cannot himself consume the whole produce of his 
little garden, but he exchanges the surplus for other 
things of which he stands in need. 

Caroline. Besides, he would not have had sufficient 
time to bestow on the cultivation of his garden, if he had 
been, at the same time, obliged to provide for all his 
other wants. 

157. What will persons do with the surplus of any article, above 

what is needed by themselves ? 158. How may the person who 

cultivates only a little spot of ground be said to produce a general 
harvest ? 



ON THE DIVISION OF LABOR. 55 

Mrs B. Very true ; those therefore who mean to 
partake of the fruits of his garden, must contribute to- 
wards the supply of tliose other wants ; some will bring 
him fish from the river, others game from the woods ; 
when his immediate necessities are supplied he will be 
induced to exchange his vegetables for articles of con- 
veniency, such as baskets to contain his fruit, or some of 
the rude implements of husbandry ; or he may finally be 
tempted to part with some for mere luxuries, such as 
rare shells, feathers, and other personal ornaments. His 
neighbors will therefore be eager to procure and pro- 
duce articles which, either from necessity, conveniency, 
or merely from pleasure, will induce the gardener to part 
with the produce of his garden : for this purpose inven- 
tion will be stimulated, new articles will be produced, 
skill will be acquired, and a general spirit of industry de- 
veloped. 

Caroline. So far the introduction of barter seems to 
answer a very useful purpose ; but when once industry is 
roused, why should not every one exert his abilities to 
supply his own wants, and gratify his desires, without the 
intervention of barter ? If a man happens to be possessed 
of a superfluous quantity of any commodity, it is no 
doubt desirable to exchange it for something more want- 
ed: but it seems to me to be an unnatural and circui- 
tous mode of proceeding, to produce something which 
we do not want, in order afterwards to exchange it for 
something which we do want. 

Mrs B. Would you then have the baker kill his 
own meat as well as bake his own bread, brew his own 
beer, build his own house, make his own clothes, and do 
a thousand other things, instead of procuring them in 
exchange through the sale of his b^ead ? 

159. What ai-ticles will the person who cultivates the ground he 

likely first to receive in exchange for his surplus produce ? 160. 

What would he then receive? 161. What will the neighbors 

of the gardener be likely to do ? 162. What objection does Car- 
oline suggest in relation to such a system of barter ? 163. What 

js the reply of Mrs B. .' 



56 ON THE DIVISION OF LABOR. 

Caroline. Oh no, it would be impossible to under- 
take so many occupations; and then he can do one 
thing better than he can do many : but this separation 
of trades and employments cannot take place in a sav- 
age state. 

Mrs B. No, but it begins to operate as soon as bar- 
ter is introduced ; and it is to this circuitous mode that 
we owe all our improvements in skill and dexterity ; the 
advantages of which are much more important than you 
imagine. 

When barter became common, it was soon discovered 
that the more a man confined himself to any one single 
branch of industry, to the fabrication of bows and arrows 
for instance, the greater the skill and dexterity he acquir- 
ed in that particular art ; so that he could make bows 
and arrows not only quicker, but of better workmanship 
than another man who followed a variety of pursuits. 

Caroline. Now I begin to understand the advantage 
that results from barter, independently of its inspiring a 
spirit of industry and a taste for a variety of enjoyments. 
The artist who has acquired a superior degree of excel- 
lence in the fabrication of bows and arrows, would gain 
more, by confining himself entirely to that occupation, 
and exchanging his merchandise for whatever else he 
was desirous of obtaining, than by turning his attention 
to a variety of pursuits. 

Mrs B. No doubt he would, provided he were 
sure of being able to dispose of all the bows and arrows 
he could make; for it would be useless to fabricate more 
than he could sell or exchange ; and as no one could be- 
come a purchaser, unless he had something to offer in 
return, a long period of time must elapse before the pro- 
gress of industry woyjd create a sufficient number of pur- 
chasers to enable an'individual to earn a livelihood by the 
fabrication of bows and arrows. 

164, When does the separation of trades and employments be- 
gin to take place ? 165. When barter becomes common, what 

is discovered ? 166. In what stage of society are men enabled 

to devote themselves advantageously to one particular art .' 



ON THE DIVISION OF LABOR. 57 

It is therefore only in a more advanced stage of soci- 
ety that the demand for commodities is so great that 
men find it advantageous to devote themselves wholly to 
. one particular art. 

Adam Smith observes, that "in lone houses and very 
small villages which are scattered about in so desert a 
country as the highlands of Scotland, every farmer must 
be a butcher, baker, and brewer for his own family. In 
such situations we can scarcely expect to find even a 
smith, a carpenter, or a mason within less than twenty 
miles of another of the same trade. The scattered fami- 
lies that live eight or ten miles distant from the nearest 
of them, must learn to perform for themselves a great 
number of little pieces of work for which, in more pop- 
ulous countries, they call in the assistance of these work- 
men." 

This separation of employments, which in political eco- 
nomy, is called the division of labor, can take place only 
in civilized countries. In the flourishing states of Eu- 
rope we find men not only exclusively engaged in the 
exercise of one particular art, but that art subdivided into 
numerous branches, each of which forms a distinct occu- 
pation for different workmen. 

Here is a beautiful passage in Adam Smith, the merits 
of which you will now be able to appreciate. 

Caroline reads. " Observe the accommodation of 
the most common artificer or day-laborer in a civilized 
and thriving country, and you will perceive that the num- 
ber of people of whose industry, a part, though but a 
small part, has been employed in procuring him this ac- 
commodation, exceeds all computation. The woollen 
coat, for example, which covers the day-laborer,* as 

167. Why cannot they do it before that time ? 168. What ac- 
count does Adam Smith give of some places of sparse population like 
the highlands of Scotland ?^ — 169. Where can separation of em- 
ployments take place ? 170. In the flourishing states of Europe 

what do we find illustrative of this subject ? 



58 ON THE DIVISION OF LABOR* 

coarse and rough as it may appear, is the produce of the 
joint labor of a great multitude of workmen. The shep- 
herds, the sorter of the wool, the comber or carder, the 
dyer, the scribbler, the spinner, the weaver, the fuller, the 
dresser, with many others must all join their different 
arts in order to complete even this homely production. — 
How many merchants and carriers, besides, must have 
been employed in transporting the materials from some of 
those workmen to others who often live in a very distant 
part of the country ! How much commerce and naviga- 
tion in particular, how many shipbuilders, sailors, sail- 
makers, ropemakers, must have been employed in or- 
der to bring together the different drugs made use of by 
the dyer, which often comes from the remotest corners of 
the world ! What a variety of labor too is necessary in 
order to produce the tools of the meanest of those work- 
men ! To say nothing of such complicated machines as 
the ship of the sailor, the mill of the fuller, or even the 
loom of the weaver, let us consider only what a variety 
of labor is requisite in order to form that very simple 
machine, the shears with which the shepherd clips the 
wool. The miner, the builder of the furnace for heating 
the ore, the feller of the timber, the burner of the char- 
coal to be made use of in the smeltinghouse, the brick- 
maker, the bricklayer, the workmen who attend the fur- 
nace, the millwright, the forger, the smith, must all of 
them join their different arts in order to produce them. 
Were we to examine, in the same manner, all the differ- 
ent parts of his dress and household furniture, the coarse 
linen shirt which he wears next his skin, the shoes which 
cover his feet, the bed which he lies on, and all the 
different parts which compose it, the kitchen grate 
at which he prepares his victuals, the coals which he 

171. What enumeration of artificers does Adam Smith think 

necessary in the production of woolen cloth ? 172. How is 

the shipwright, the sailor, the ropemaker, the merchant, the miner, 

&c. furnished with employment in its production ? 137. What 

further examination does he propose in order to show how many 
persons have been employed for our convenience ? 



ON THE DIVISION OF LABOR. 59 

makes use of for that purpose, dug from the bowels of 
the earth, and brought lo him by a long sea and a long 
land carriage, all the other utensils of his kitchen, all 
the furniture of his table, the knives and forks, the earth- 
en or pewter plates upon which he serves up and di- 
vides his victuals, the different hands employed in prepar- 
ing his bread and his beer, the glass window which lets 
in the heat and the light, and keeps out the wind and 
rain, with all the knowledge and art requisite for pre- 
paring that beautiful and happy invention, without which 
these northern parts of the world could scarce have af- 
forded a very comfortable habitation, together with the 
tools of all the different workmen employed in producing 
those different conveniences ; if we examine, I say, all 
these things, and consider what a variety of labor is 
employed about each of them, we shall be sensible that 
without the assistance and cooperation of many thou- 
sands, the very meanest person in a civilized country 
could not be provided, even according to \^hat we very 
falsely imagine the easy and simple manner in which he 
is commonly accommodated. Compared, indeed, with 
the more extravagant luxury of the great, his accommo- 
dation must no doubt appear extremely simple and easy ; 
and yet it may be true, perhaps, that the accommodation 
of an European prince does not always so much exceed 
that of an industrious and frugal peasant, as the accom- 
modation of the latter exceeds that of many a Africau 
king, the absolute master of the lives and liberties of ten 
thousand naked savages." 

It is very true, certainly ; and it reminds me of an ob- 
servation of Dr Johnson in the Rambler, " That not a 
washerwoman sits down to breakfast, without tea from 
the East indies, and sugar from the West." 

1 now comprehend your reference to the little story 
of the Cherry Orchard : it was by dividing amongst the 

174. What comparison does he make between the peasant, the 

European prince and the African King ? 175. What remark of 

Dr Johnson is quoted ? 



60 ON THE DIVISION OF LABOR. 

children the different parts of the process of plaiting 
straw, that they succeeded so nnuch better than the boy 
who was left to perform the whole of his plait alone. 

Mrs B. I will now point out to you some exam- 
ples remarked by Adam Smith in illustration of the ben- 
efits derived from the division of labor. That of the 
pin manufactory 1 shall give you in his own words. He 
observes, that " A workman not educated to this busi- 
ness, nor acquainted with the use of the machinery em- 
ployed in it, could scarce, perhaps, with his utmost in- 
dustry, make one pin in a day, and certainly could not 
make twenty. But in the way in which this business is 
now carried on, not only the whole work is a peculiar 
trade, but it is divided into a number of branches of which 
the greater part are likewise peculiar trades. One man 
draws out the wire, another straightens it, a third cuts 
it, a fourth points it, a fifth grinds it at the top for re- 
ceiving the head. To make the head requires two or 
three distinct operations ; to put it on is a peculiar busi- 
ness, to whiten the pins is another ; it is even a trade by 
itself to put them into the paper ; and the important bu- 
siness of making a pin is, in this manner, divided into 
about eighteen distinct operations, which in some man- 
ufactories, are all performed by distinct hands, though 
in others the same man will sometimes perform two or 
three of them. I have seen a small manufactory of this 
kind where ten men only were employed, and were some 
of them consequendy performed two or three distinct 
operations : but though they were very poor, and there- 
fore but indifferently accommodated with the necessary 
machinery, they could, when they exerted themselves, 
make among them about twelve pounds of pins in a day. 
There are in a pound upwards of four thousand pins of 
a middling size. Those ten person, therefore could make 

176. How long does Adam Smith suppose it would take a person 

not educated to the business to make a pin ? 177. How is the 

labor of making pins now divided — and into how many distinct opera- 
tions .' 178. How many pins does he say ten persons have been 

seen to make in a day? 



0^ THE DIVISION OF LABOR. 61 

among them upwards of fortyeight thousand pins in a 
day. Each person, therefore, making a tenth part of 
fortyeight thousand pins, might be considered as making 
four thousand eight hundred pins in a day. But if they 
had all wrought separately and independently, and with- 
out any of them having been educated to this peculiar 
business, they certainly could not each of them have 
made twenty, perhaps not one pin in a day ; that is, 
certainly, not the two hundred and fortieth, perhaps not 
the four thousand eight hundreih part of what they are 
at present capable of performing, in consequence of a 
proper division and combination of their different opera- 
tions." 

Caroline. These effects of the division of labor are 
really wonderful ! 

Mrs B. The instance which Adam Smith quotes in 
proof of the dexterity acquired by men, whose labor is 
reduced to one simple operation, is also very striking. — 
After observing, that a man unaccustomed to a black- 
smith's forge can W'ith difficulty make three hundred 
nails in a day, he says that a common blacksmith can 
forge one thousand, but that he has seen boys who have 
been brought up to the art of nail-making exclusively, 
acquire such a degree of dexterity as to complete two 
thousand three hundred in a day. 

Caroline. The difference is prodigious : but I can 
conceive it when I observe with what awkwardness a 
man handles the tools of an art with which he is unac- 
quainted, whilst they are used with ease and dexterity 
by those who are accustomed to them. 

Mrs B. Then w^e must consider that when a man's 
whole attention and talents are turned to one particular 
object, there is a much greater probability of his discov- 
ering means of improving his workmanship, or facilita- 

179. How great then is the gain from this division of labor? 

180. What instance does Adam Smith give of the dexterity men 

will acquire when labof is reduced to one simple operation ?- 181. 

What is the probability as to improvements in the mechanic arts 
from such a division of labor ? 

6 



62 ON THE DIVISION OF LABOR. 

ling and abridging his labor, than if his mind were en- 
gaged in a variety of pursuits. It is most frequently 
to workmen that we are indebted for improvements in 
the process and instruments of labor. 

Another advantage derived from the division of labor 
is the regular and uninterrupted manner in which it ena- 
bles the work to proceed. A laborer who has many 
diversified occupations not only loses time in going from 
one to another, but also in settling himself to his differ- 
ent employments ; and as soon as his hand is in, as the 
workmen say, he must quit his work to take up another, 
totally different. Thus he must go from his plough to 
his loom, from his loom to his forge, from his forge to 
his mill — but no — there could be neither plough, nor 
loom, nor forge, nor mill, before a division of labor had 
taken place ; for no man could either find time or acquire 
skill to construct such machines unless they could bestow 
the whole of their labor and attention upon them. 

The construction of machines, therefore, we may con- 
sider as a refined branch of division of labor. Their 
effect in facilitating and abridging labor is almost incre- 
dible. How easy, for instance, the operation of grind- 
ing corn is rendered by so simple a machine as a wind- 
mill ! Were this to be done by manual labor, by bruizing 
it between stones, it would be almost an endless task ; 
whilst in a windmill the natural motion of the air per- 
forms nearly the whole of the work. 

Caroline. But the cotton mills we have lately seen 
are a much more wonderful example of the effect of 
machinery. In these a steam-engine sets all the wheels 
and spindles in motion, and performs the work of hun- 
dreds of people. 

Mrs B. The great efficacy of machinery in the hands 

182. What is another advantage from the division of labor ? 183^ 

What illustration of this is given ? 184. What may be consider- 
ed a refined branch of the division of labor ? 185. What is said 

of the grinding of corn illustrative of the subject ? 186. What 

example still more striking is mentioned by Caroline ? 



ON THE DIVISION OP LABOR. 63 

of man, depends upon the art of compelling natural 
agents^ such as wind, steam, and water, to perform the 
task which he would otherwise be obliged to execute 
himself 5 by which means labor is very much abridged, 
a great deal of human effort is saved, and the work is 
often accomplished in a more uniform and accurate man- 
ner. 

We noticed the skill that could be acquired in the art 
of forging nails : but the utmost efforts of manual labor 
fall far short of machinery. A machine had been in- 
vented in the United States of America for the purpose 
of cutting nails out of iron, the operation of which is so 
rapid that it forms 250 perfect nails in the space of one 
minute, or 15,000 in an hour. 

Caroline, The metals, 1 suppose, could not have 
been brought into use, till a considerable progress had 
been made in the divison of labor. 

Mrs B. Certainly not ; for it requires the exclusive 
labor of a great number of men to work a mine. The 
Mexicans and Peruvians in America, though they had 
made some progress towards civilization, had never 
sought for gold in the bowels of the earth ; but content- 
ed themselves with what they could pick up in the beds 
of rivers. In Britain, the Cornish mines were work- 
ed in very ancient times, and it is even supposed that 
the Phoenicians had introduced this art among the an- 
cient Britons, with whom they are said to have trafficked 
for tin and other metals. 

Caroline. I am perfectly satisfied that the division 
of labor is a necessary step towards the accumulation of 
national wealth : but may it not have an injurious effect 
on the mental faculties of individuals ^ A man who is con- 
fined to one simple mechanical operation, however great 

187. Upon what does the great efficacy of machinery depend ? 

188. What is said of the machine for cutting nails invented in the 
United States ? 189. What is said of the Peruvians and Mexi- 
cans as to their knowledge and use of gold ? 190. By whom is 

it supposed the Cornish mines were first worked ? 



64 



ON THE DIVISION OF LABOR. 



the facility and perfection he may acquire in the perform^ 
ance of it, is shut out from all other improvemsnt ; his 
mind will never be roused to exertion by difficulty, in- 
terested by variety, or enlightened by comparison. His 
ideas will be confined within the narrow limits of his 
monotonous employment, and his rational powers will 
become so degraded as to render him scarcely superior 
to the machinery at which he works. Whilst a com- 
mon husbandman, whose occupations are diversified, and 
but little aided by machinery, acquires knowledge by 
experience in his various employments, and, having a 
much wider range of observation, enjoys a correspond- 
ing developement of intellect. 

Mrs B. The knowledge of a ploughnian is often 
remarkably distinct in his limited sphere ; but yet I have 
usually found that in conversing upon general topics 
with a ploughman and with a mechanic, the latter has 
discovered more intelligence, and that his mind has 
appeared more active and accustomed to reflection. 
1 conceive this to be owing to the facility which the arts 
afford in bringing men together in society. They are 
carried in towns, where neighborhood renders social 
intercourse more easy than in scattered hamlets in the 
country. When they meet together they talk over each 
other's concerns, read the newspapers, and discuss the 
politics of the parish, or of the state. This observation 
is particularly applicable to manufactories, where a num- 
ber of persons generally work together in the same room, 
and their employment seldom prevents conversation. 
Social intercourse, however low the members amongst 
whom it exists, cannot fail to promote the diffusion of 
knowledge ; they become acquainted with the comforts 
and conveniences which have been acquired by the 
more skilful and industrious ; they learn to appreciate 

191. What suggestion does Caroline make as to the effect that 

this division of labor will have on the intellect ? 192. How does 

Mrs B. answer this suggestion ?— -193, What effect does sh& 
suppose social intercourse has as to the diffusion of knowledge I 



ON THE DIVISION OP LABOR. 66 

their value, and are stimulated to acquire the means of 
obtaining them ; a mode of instruction which we have 
observed to be the most essential step towards dispelling 
ignorance and exciting industry. 

Caroline. But is there not some danger that the 
advantages obtained in the improvement of the mind by 
this state of constant intercourse amongst the lower 
classes in manufacturing towns, will be more than coun- 
terbalanced by the corruption of morals ? How much 
more vice appears to prevail amongst the lower orders 
in crowded cities than in the cottages of the peasantry ! 

Mrs B. You do not consider the difference of the 
population ; there are often a greater number of people 
collected together in a manufacturing town than there 
are scattered over a space of thirty square miles of coun- 
try : were their morals, therefore, the same, vice would 
appear much more conspicuous in the town than in the 
country. Admitting, however, the comparative amount 
of crimes to be greater in the former, I believe that it 
is compensated by a more considerable proportion of 
virtue. 

Caroline. But you must allow that we hear much 
more of the vices than of the virtues of manufacturing 
town and great cities. 

Mrs B. Because crimes, from being amenable to 
the laws, are necessarily made known, whilst virtue sel- 
dom receives any public testimony of approbation. 
Every act of fraud or violence is sounded in our ears, 
whilst the humanity, the sympathy for sufferings, the sac- 
rifices which the poor make to relieve each other's dis- 
tresses, are known only to those who enter into their 
domestic concerns. This has been frequently noticed 
by medical men who have attended the lower classes of 
people in sickness at their own houses. 

194. What inquiry does Caroline make as to the effect, upon 

morals, of manufacturing establishments ? 195. What is Mrs. 

B's. reply ? 196. Why does Mrs B. suppose that more is said 

of the vices than of the virtues of persons in manufacturing estab- 
lishments ? 

6* 



66 ON THE DIVISION OF LABOR. 

Caroline. Yet, upon the whole, do you not think 
that the situation of the poor in the country is better than 
it is in towns ? 

Mrs B. They have each their advantages and dis- 
advantages, and I should imagine that good and evil are 
pretty equally balanced between them. If the inhabit- 
ants of towns are better informed, and can more easily 
acquire some of the comforts of life, the inhabitants of the 
country are more vigorous and healthy, more cleanly, and 
they have the advantage of a more constant and regular 
demand for the produce of their labor, which is not so 
liable to be affected by the casualties of war, fashion, 
and other causes, which often occasion great distress to 
manufacturers. 

But should you still entertain any apprehension that 
the division of labor may check and repress the intellec- 
tual improvement of the lower classes, ] should consider 
this as amply compensated by its prodigious effect in the 
multiplication of wealth, a circumstance which not only 
increases the comforts of the poor, but by facilitating 
the means of acquiring knowledge, ultimately promotes 
its diffusion among all classes of men. It is to the 
divisionof labor that we are indebted for all the improve- 
ments in the processes of art, and amongst others for 
the invention of printing, which has proved the means 
of so wonderfully extending all kinds of knowledge. 

We have now, I think, brought our savages to a con- 
siderable degree of advancement in civilization ; 1 would 
wish you briefly to recapitulate the causes which have 
produced this happy change, and at our next inter- 
view we will continue to trace their progress. 

Caroline. Labor seems to be the natural and imme- 
diate cause of wealth ; but it will produce litde more than 

197. What comparison is made between the poor of manufactur- 
ing establishments and those in the country ? 198. On the sup- 
position, that this division of labor is calculated to check and repress 
intellectual improvement, how is it thought the evil may be com- 
pensated? 199. To what are we indebted for improvements in 

'he arts? 



On capital. C7 

the necessaries of life until its benefits are extended by 
the establishment of such a government as can give secu- 
rity to property. The spirit of industry will then be 
rapidly developed. The surplus produce of one individ- 
ual will be exchanged for that of another. The facili- 
ties thus offered to barter will naturally introduce the 
division of labor or of employment; and will soon give 
rise to the invention of machinery, the merits of which 
we have just discussed. 

Mrs B. Extremely well, Caroline. We shall now 
take leave of this improved slate of society for the pres- 
ent, with a conviction, I hope, that we leave mankind 
much happier than we found it. 



CONVERSATION VI. 

ON CAPITAL. 

Distinction of Rich and Poor. — Accumulation of Wealth. 
— How it is disposed of. — The poor Labor for 
it. — Contract between the Capitalist and the Laborer. 
— The Rich under the necessity of employing the Poor. 
— Definition of Capital. — How Capital yields an in- 
come. — Profits made by the Employment of Labor- 
ers. — Productive Laborers. — Independence of men 
of Capital. — Industry limited by extent of Capital. 
Industry increases in proportion to Capital. — Cap- 
ital augmented by the addition of savings from 
income. — Happiness resulting rather from the grad- 
ual Acquisition, than the actual Possession of 
Wealth. 

MRS B. 

In tracing the progress of society towards civilization, 
we noticed the happy effects resulting from the secui'ity 

200. What recapitulation of the argument is given by Caroline ? 



68 ON capitId. 

of property and the division of labor.' From this period 
we may also date the distinction of rich and poor. 

Caroline. And all the evils that arise from inequality 
of condition. This alas ! is the dark side of the picture. 
The weeds spring up with corn. 

Mrs B. 1 know not how this distinction can be call- 
ed an evil. If it does not exist in a savage state, it is 
because indigence is universal; for no one being able to 
acquire more than what is necessary for his immediate 
maintenance, every one is poor. When civilization 
takes place, the advantages arising from the division 
of labor enable an industrious skilful man to acquire 
more wealth than will suffice to gratify his wants or 
desires. By continued exertion this surplus produce of 
his industry in the course of time accumulates, and 
he becomes rich, whilst the less industrious, who acquires 
merely a daily subsistence, remains poor or possessed of 
nothing. 

Caroline. I see no great advantage in this accumu- 
lation of wealth, for it must either be spent or hoarded ; 
if spent, the industrious man is eventually no richer than 
his idle neighbors ; and if hoarded, the accumulation is 
of no use to any one. 

Mrs B. Your dilemma is put with some ingenuity, 
but you must at least allow that, where more is spent, 
there is a greater scope for enjoyment ; and in regard to 
hoarding, I hope you are not recurring to your notions 
about riches and money, and forget that the wealth of 
which we have been speaking consists of exchangeable 
commodities, either in agricultural or manufactured, many 
of which are not of a nature to be kept, where men are 
inclined to hoard them. A much better mode of dispo- 
sing of them has been devised ; one which not only 
secures, but augments them. 

201. From what period is dated the distinction of rich and poor ? 

202. What is the condition of the savages as to property ? 

203. What is the objection of Carohne to v/ealth ? 204. What 

reply does Mrs B. make to this objection ? 



ON CAPITAL. 69 

t 

Caroline, What can that be ? 

Mrs B. This you will hardly understand without 
some previous explanation. 

In civilized society m^n cannot, as in a state of nature, 
obtain a subsistence by hunting, or from the spontaneous 
produce of the earth; because the wilderness has been 
destroyed by cultivation, and the land has become pri- 
vate property. 

Caroline. And when the land is engrossed by the 
rich, there seems to be no resource left for the poor ? 

Mrs B, What do you suppose the rich do with their 
wealth ? 

Caroline. The poor, I am sure, partake very little 
of it ; for the sums of the most charitable give away are 
but trifling compared to what they spend upon them- 
selves. 

Mrs B. I am far from wishing that the poor should 
be dependent on the charily of the rich for a subsistence. 
Is there no other mode of partaking of their wealth but 
as beggars ? 

Caroline. Not that I know of, unless by stealing. 
Oh no, I guess now — you mean they may earn it by 
their labor ^ 

Mrs B. Certainly} The poor man says to the rich, 
" You have more than you want, whilst I am destitute. 
Give me some little share of your wealth for a subsist 
tence ; I have nothing to offer in exchange but my labor ; 
but with that I will undertake to procure you more than 
you part with — if you will maintain me, i will work for 
you." 

Caroline. But is it not usual to pay wages to labor- 
ers instead of maintaining them ? 

Mrs B. It comes to the same ; for the wages pur- 

205. Why cannot men in civilized socie^ty obtain a living in the 

same manner that savages do ? 206. Does Mrs B. consider it 

desirable that the poor should live upon charity ? 207. In wht^t 

pther way can the poor be benefited by the rich ? 



70 ON CAPITAL. 

chase a maintenance ; the money merely represents the 
things of which the laborer stands in need, and for which 
he may exchange it. 

Caroline. The laborer may then be supposed to 
say to the rich man, " Give me food and clothing, and 1 
by my labor will produce for you other things in return." 
Mrs B. Precisely ; the rich man exchanges with the 
laborer the produce or work that is already done, for 
work that is yet to be done. It is thus that he acquires 
a command over the labor of the poor, and increases his 
wealth by the profits he derives from it. 

Caroline. This is a resource for the poor, I own ) 
but not enough to satisfy me entirely, for they are left at 
the mercy of the rich, and if these did not choose to em- 
ploy them, they would starve. 

Mrs B. True ; but what would the rich do without 
their assistance ? 

Caroline. Their wealth would furnish them a plen- 
tiful subsistence. - 

Mrs B. At first it might ; but in time it would be 
consumed. Their harvests and their cattle would be 
eaten, their clothes worn out, and their houses fallen into 
decay. 

Caroline. But you know that the harvests are annu- 
ally reproduced, new clothes are purchased, and houses 
repaired or built : riches easily obtain all these things. 
. Mrs B. But who is it that reproduces the harvest ? 
Who manufactures new clothes and builds new houses, 
but the poorer classes of men ^ Without their aid you 
could spend only what you actually possessed, and when 
it was gone you would be destitute. 

Caroline. True ; that is an idea that often perplexed 
me when I was a child. I thought that in proportion 
as my father spent his money he must be impoverished ; 

108. What is the nature of the exchange between the poor and 

the rich ? 209. How does the rich man acquire a command over 

the labor of the poor ? 210. Whatobjection does Caroline offer 

to this? 211. What reply does Mrs B. make? 212. By 

whom are the rich resupplied, as their stores become exhausted ? 



ON CAPITAL. 71 

but now I understand that wealth is reproduced by the 
labor of the poor, and that thence arises an annual 
income. 

Mrs B. If the value produced by the laborer exceeds 
what he has consumed, the excess will constitute an in- 
come to his employer ; and observe that an income can 
be obtained by no other means than by the employment 
of the poor. 

Caroline, Indeed I was perfectly aware that it was 
necessary to employ laborers for the purpose ; but I did 
not consider that it created reciprocity of benefit, by ren- 
dering the poor in a great measure independent of the 
will of the rich, 

Mrs B, The rich and poor are necessary to each 
other ; without the rich the poor would starve ; without 
the poor the rich would be compelled to labor for their 
own subsistence. 

Caroline. It, is very true, Mrs B.; and this is, I sup- 
pose, what you alluded to, when you said that the rich 
had a means of securing their wealth without hoard- 
ing it. 

Mrs B, Yes ; the laboring classes consume and re- 
produce it. Wealth, thus destined for reproduction by 
the employment of laborers, is called capital. You 
have heard of capital before, no doubt ? 

Caroline. Oh yes ; a man of fortune is said to be a 
man of capital ; I always considered these as synony- 
mous terms. 

Mrs B. So they are ; and you may have heard also 
that to spend a capital is very ruinous ; that it should be 
placed in some profitable line, so as to yield an income ; 
that is to say, it must be employed to set laborers to 
work, and the profit derived from their labor is called 
revenue or income. 

213. How is neat income furnished to the rich ? 214. What 

is the nature of the reciprocity existing between the poor and the 

rich ? 215. What is called capital ? 216. What should be 

done with capital? 



72 ON CAPITAL. 

Caroline. If capital is employed m paying the wa- 
ges of laborers, it is spent and consumed by them, and 
is lost to the capitalist as much as if he spent it. 

Mrs B. No ; capital employed is consumed, but not 
destroyed : it is at least no more destroyed than the 
seed sown in the ground, which is reproduced, with 
increase. Thus the capital consumed by laborers is 
reproduced with increased value in the articles of their 
workmanship. 

Caroline. I know that a capital produces an income ; 
and seem to have a clear idea how this is effected. 
Yet I have some scruples respecting the mode of obtain- 
ing it, which 1 am not altogether able to remove. I see 
that if the laborer reproduces for the capitalist only as 
much as he consumes, or, in other words, commodities 
equal in value to his wages, the income is only equiva- 
lent to the outgoing ; he restores therefore exactly what 
the capitalist has advanced him, the latter being neither 
a loser nor a gainer by the bargain ; any farther, at least, 
than that, by reproduction, perishable produce is made 
to last 5 and that if more is produced, it seems but fair 
that the laborer should have the whole of his earnings. 

Mrs B. No capitalist would consent to such an 
agreement. When the poor man applies to the rich 
one for a maintenance, offering his labor in return, he 
does not say — for the food you give me during the pres- 
ent year, I will produce an equal quantity of food next 
year — because he knows that he would not be employ- 
ed on such terms ; he must by the prospect of some 
advantage induce the capitalist to exchange food that is 
already produced for something .that is yet to be pro- 
duced. He therefore says — for the food you give me 
now, I will raise you a greater or more valuable supply 
next year. 

217. How does Mrs B. compare the employment of capital to the 

seed cast into the ground ? 218. What objection does Caroline 

make to this mode of reproduction of capital? 219. Why does 

not the laborer receive the profits on his labor instead of the capi- 
talist? 



ON CAPITAL. 73 

Caroline. It appears to me a hardship, notwithstand- 
ing, that after the rich have engrossed the whole proper- 
ty of the land, nothing should be left to the poor beyond 
their own labor, and that they should not be allowed 
to reap the whole of the advantages it affords. If I 
were a legislator, I should be disposed at all events to 
establish a law compelling the capitalist to allow the 
laborer the whole of the profit arising from his work. 
Such a regulation would surely tend to improve the con- 
dition of the poor. You smile, Mrs. B., I am afraid 
you will not allow of my plan. 

Mrs B. I would suggest an addition to it, which is 
a law to compel the capitalist to employ the laborers ; 
for on your terms none would give them work. The 
farmer, were he obliged to pay his husbandmen the 
value of the crops they raised, would derive no profit 
from their sale ; he would, therefore, leave his fields 
uncultivated, the land would lie waste, and the husband- 
men starve. Manufacturers for the same reason would 
discharge their workmen, merchants their clerks ; in a 
word, industry would be paralyzed ; and were you to 
devise a system of certain and inevitable ruin to a coun- 
try, I do not think you could adopt a more efficacious 
mode of promoting your design. 

Caroline. So much for the wisdom of my laws ! I 
certainly ought to have foreseen these consequences; 
since, as you observed before, the inducement for the 
rich to employ the poor is the advantage the former de- 
rive from the latter. 

Mrs B. Undoubtedly. The profits the rich reap 
from the employm.ent of their capital constitutes their 
income ; without such income the capital, it is true, 
might, by your compulsatory laws, be reproduced an- 
nually ; but yielding no income, the capitalist would 

220. What law would Caroline have made? 221. What would 

be the consequence in Such a law were to be made ? 222. What 

constitutes the income of the rich ? 

7 



74 ON CAPITAL. 

gradually consume it in the maintenance of his family ; 
and thus his means of employing laborers would annu- 
ally diminish. 

So far from considering the profits which the capital- 
ist derives from his laborers as an evil, I have always 
thought it one of the most beneficent ordinations of 
Providence, that the employment of the poor should be 
a necessary step to the increase of the wealth of the 
rich. 

Thus the rich man has the means of augmenting his 
capital, not by hoarding, but by distributing it among his 
laborers, who consume it, and reproduce another and a 
larger capital — hence have they obtained the name of 
productive laborers. 

Caroline. When a man, therefore, becomes possess- 
ed of a capital, whether by accumulation of his savings 
or by inheritance, it is no longer requisite for him to 
work for a maintenance, as others will labor for him. 

Mrs B. It depends on the amount of his capital, 
and the extent of his desires. If it will yield an income 
sufficient to maintain him and his family with the degree 
of comfort or affluence which satisfies his ambition, he 
may live in idleness; if not, he will work himself; or 
at least superintend his laborers. This is the case with 
the farmer, the merchant, the master manufacturer, each 
of whom superintends his respective concerns. 

Do you understand now, that no productive enter- 
prise can be undertaken without capital f Capital is 
necessary to pay laborers, to purchase materials to 
work upon, instruments to work with ; in short to defray 
the whole expense attached to the employment of la- 
borers. 

Caroline. But a man may undertake a productive 

223. Is it to be reckoned an evil, that the capitalist receives a 

profit from his laborers ? 224. Why should the poor who work 

for the rich be called productive laborers ? 225. Is it necessary 

that a person who possesses a capital should labor for his maintenance ? 

226. Can a productive enterprise be undertaken without 

capital ? 



ON CAPITAL. 75 

enterprise without employing laborers ; for instance, if 
he gathers mushrooms on a common, he requires no 
capital for that purpose ; no tools are used, the earth 
produces mushrooms spontaneously, and every one has 
a right to gather them. The same may be said of nuts 
and wild strawberries. 

Mrs B. These are small remnants of the resources 
of a savage state, in which subsistence is derived from 
the spontaneous produce of the earth : but ihe employ- 
ments which require no capital, are very inconsiderable, 
and occur only during a short season of the year. 

Caroline. There is one, whch appears to me of 
great importance — fishing. Fishermen are in no want 
of capital ; the fish cost them merely the trouble of 
catching. Oh no ! I am mistaken ; 1 forgot the nets 
and the boats that are necessary for fishing ; besides, 
the men must have something to subsist on, when the 
weather will not allow them to venture on the water. 

But there is another case, Mrs B. — I have known per- 
sons who were worth nothing, and yet who set up in 
business on credit. 

Mrs B. That is no exception ; for credit is the em- 
ployment of the capital belonging to another. 

Caroline. Well, it is a melancholy reflection that 
one must always possess something in order to gain more. 
He then who has nothing to begin with has no means 
of escaping from poverty. 

Mrs B. Poverty is a word of vague signification. 
If you mean to express by it a state of positive indi- 
gence the laborer who earns a subsistence from day to 
day, cannot come under that description. But if you 
use the word poverty in opposition to wealth, that is to 
say, to the possession of capital, laborers, though usual- 

227. In what way does Caroline ' suppose such an enterprise 

should be carried on without capital ? 228. What reply does 

Mrs B. make ? 229. What reply does Mrs B. make, to Caroline's 

saying, one sometimes engages in business on credit ? 230. 

What does Caroline say is a melancholy reflection ? 231. What 

does Mrs B. say in reply ? 



76 , ON CAPITAL. 

]y in that state, are not necessarily condemned to it. A 
healthy and hard-working man may, if he be economi- 
cal, almost always lay aside something as the beginning 
of a little capital, which by additional savings accumu- 
lates. 

Caroline. That is true. Thomas, our undergar- 
dener, who is a very intelligent, industrious man, was 
saying the other day to one of his fellow laborers, that 
as soon as he had laid by a little money to begin the 
world with, he intended to marry. But it seems to me 
that if my father would give him a cottage, and an acre 
or two of ground, he might raise vegetables for market, 
and by these means support himself and his family. 

jyirs B. In that case your father would supply the 
capital. The cottage and the land is a capital, but they 
will not do alone. Thomas would besides require 
garden tools to work with, and an assistant, if not seve- 
ral, to prepare the ground. Then he must not only 
subsist himself, but maintain his family till the produce 
of his garden can be brought to market. In the course 
of three or four years, from the earnings of his daily 
labor he may have amassed a little capital sufficient to 
enable him to undertake this ; he will then no longer be 
a laborer for hire, but will work on his own account. 
It is thus everything has a beginning ; the largest 
fortunes have often had no greater origin. 

Now, supposing Thomas to be able to rent an acre of 
land when he is worth 100/., he may rent ten acres 
when he is worth 1000/., but he cannot rent more ; he 
cannot increase his farm beyond his means of paying 
for it ; his industry, therefore, is limited by the extent of 
his capital. 

Caroline. I do not quite understand that. 

Mrs. B. Let us imagine a tradesman, a shoemaker 
for instance, to be master of a capital which will enable 

232. How can a laborer obtain a capital of his own ? 233. 

What is the supposed case of a gardener's becoming possessed of a 
capital ,' 234. By what is his industry then limited? 



ON CAPITAL. 77 

him lo maintain ten workmen, and that the following 
year he finds that he has gained lOOZ. by the profits de- 
rived fi:-om their labor. This 100/. constitutes his in- 
come ; if he spend it, his capital remains what it was 
before ; but if he adds it to his capital it will enable him 
to maintain and provide work for a greater number of 
journeymen. Let us say that he can now employ 
twelve instead of ten men ; these will make him a 
greater quantity of shoes, and the additional profits aris- 
ing from their sale will, if added to his capital, still 
farther increase his means of employing workmen. 
Thus the demand for labor, or, in other words, em- 
ployment for the poor, will ever increase with the in- 
crease of capital, and be limited only by its defi- 
ciency. 

Caroline. But we must not forget that the master 
shoemaker and his family are to be maintained out of 
these profits ; the whole of them cannot, therefore, be 
added to his capital. 

Mrs B. Certainly not. The expenses of his family 
consume in genera], by far the greater part of a man's 
income ; but if he is prudent, he will lay aside as much 
as can be spared, and these' savings will enable him to 
enlarge and improve his business, of whatever descrip- 
tion it may be. 

Caroline. Thus a farmer would be able to extend 
and improve the cultivation of his farm by increasing 
the number of his laborers — and a merchant propor- 
tionally to extend his commercial dealings — so that the 
richer a man becomes, the more it will be in his power 
to increase his wealth. 

Mrs B. Yes ; the second thousand pounds is often 
acquired with less difficulty than the first hundred. 

Caroline. That is hard upon those who have no- 

235. What is the case supposed of a shoemaker, who increases 
his business from the profits arising from it ? 236. What con- 
sumes the greater part of a person's ordinary income ? 237. Does 

one's power to augment his riches increase with his possessions ? 
7* 



78 - ON CAPITAL. 

thing. The rich landed proprietors buy up all the little 
farms ; rich merchants engross all the great commer- 
cial speculations ; in a word, the great fish devour the 
small ones. 

Mrs B. There is no truth in that comparison. He 
who accumulates a large fortune by his industry injures 
no one ; on the contrary, he confers a benefit on the 
community. You will understand this better by and by. 
In the mean time 1 must observe to you that happiness, 
so far as it is dependent on wealth, consists less in the 
possession of riches than in the pleasure of acquiring 
them. Every degree of increasing prosperity is attend- 
ed with its enjoyment. • Your gardener, who saves Jiis 
earnings with the prospect of settling at the end of two 
or three years, has probably more satisfaction in the 
prospect of his future wealth than he will have in the 
possession of it ; as long as he continues making annual 
additions to his capital, the same source of enjoyment 
will be preserved, but will never excite so strong an in- 
terest as at first. Merchants will tell you that their first 
gains gave them greater pleasure than all their subse- 
quent accumulations. Nature has wisely attached hap- 
piness to the gradual acquisition, rather than to the ac- 
tual poisession of vv-ealth, thus rendering it an incitement 
to industry ; and we shall hereafter see that this pro- 
gressive state of prosperity is most conducive also to the 
happiness of nations. 

288, Is one person injured if another accumulates property ? 

239. What connexion does Mrs B. suppose there is between wealth 
and happiness ? 240. What does she say nature has wisely done r 



ON CAPITAL. 79 

CONVERSATION VII. 

ON CAPITAL CONTINUED. 

Of fixed Capital. — Distinction between fixed and cir- 
culating Capital. — Examples of the different kinds 
of Capital. — Of Slaves. — Fixed Capital and circu- 
lating Capital equally beneficial to the laboring 
Class. — Machinery advantageous to the laboring 
Classes. — (Quotation from Macpherson on the ad- 
vantages of Machinery. — Quotation from M. 
Say^s Treatise on Political Economy. 

MRS B. 

I. HAVE some further remarks to make to you on 
the nature of capital. 

A land owner, when he increases his capital by sav- 
ings from his income, may probably, instead of employ- 
ing the whole of his additional capital on husbandmen, 
find it more advantageous to lay out some part of it on 
workmen to build barns and outhouses, to store his crops 
and shelter his cattle 5 he may plant trees to produce 
timber, build cottages, and bring into cultivation some 
of the waste land on his farm. 

A manufacturer also, in proportion as he increases the 
number of his workmen, must enlarge his machinery or 
implements of industry. 

Caroline. But the capital laid out in building, tools, 
and machinery, will not yield a profit, like that which is 
employed in the payment of workmen, the produce of 
whose labor is brought to market. 

Mrs B. The farmer and manufacturer would not 
lay out their capital in this way, did they not expect to 
reap a profit from it. If a farmer has no barn or gra- 
nary for his corn, he will be compelled to sell his crops 

241. How will a landholder be likely to expend a portion of his 

surplus income ? 242. How would it be with the manufacturer ? 

243. Why will the farmer thus appropriate his capital ? 



80 ON CAPITAL. 

immediately after the harvest, although he might proba- 
bly dispose of them lo greater advantage by keeping 
them sometime longer. So a manufacturer, by im- 
proving or enlarging his machinery, can, with less labor, 
perform a greater quantity of work, and his profits will 
be proportionate. 

Thus, for instance, when a manufacturer can afford 
to establish a steam engine, and employ a steam of va- 
por as a substitute for the labor of men and horses, he 
saves the expense of more than half the number of 
hands he before employed. 

The capital laid out in this manner is caWedJioced cap- 
ital^ because it becomes fixed, either in land, in build- 
ings, in machinery, or implements of art ; it is by keeping 
this capital in possession, and using it, that it produces 
an income. Whilst the capital employed in the main- 
tenance of productive laborers, whose work is sold and 
affords an immediate profit, is distinguished by the name 
of circulating capital. 

The produce of a farm, or the goods of a manufac- . 
turer, afford no profit until they are brought to market, 
and sold or exchanged for other things. This descrip- 
tion of capital is, therefore, constantly circulating. It is 
transferred first from the master to the laborer, in the 
form of wages and raw materials, then from the laborer 
it is returned to the master in the form of produce or 
workmanship of increased value ; but the latter does 
not realize his profits until this produce is sold to the 
public, who turn it to their use, and are therefore called 
the consum.ers of it. 

Caroline. 1 think I understand the difference be- 
tween fixed and circulating capital perfectly. A farmer 
derives profit from his implements of husbandry by 

244. Why will the manufacturer thus appropriate his ? 245. 

How much is saved lo the manufacturer by the use of the 

steam engine ? 246. What is capital thus expended called ? 

247. Why is it called fixed capital ? 248. What is called circu- 
lating capital 1 249. When does the produce of the farm, and 

the goods of the manufacturer yield profit ? 



ON CAPITAL. 81 

their use, while kept in his possession ; and from his 
crops by parting with them. But to which kind of cap- 
ital should the farming cattle be referred ? 

Mrs B. ■ It depends upon the nature of the cattle. 
The value of the laboring cattle is fixed capital, like 
the implements of agriculture; thus the horseswhich 
draw the plough, as well as the plough itself, are ^xed 
capital. But sheep and oxen intended for market are 
circulating capital. 

Caroline. But should the plough be drawn by oxen, 
Mrs B., how would you settle the point then? for 
whilst they labor for the farmer they are fixed capital ; 
but when they are sold to the butcher they become cir- 
culating capital. 

Mrs B. They alternately belong to each of these 
descriptions of capital ; because the farmer makes 
his profit, first by keeping, and afterwards by selling 
them. 

Caroline. I'do not understand why you should call 
the maintenance of laboring men circulating capital, 
whilst you consider that of laboring cattle as fixed capi- 
tal ; they appear to me to be exactly similar. 

Mrs B. And so they are. The maintenance of 
cattle as well as that of laborers is circulating capital ; 
that maintenance is in both cases consumed and repro- 
duced with advantage ; it is therefore by parting with it 
that proOts are derived. But the value of the cattle 
themselves is fixed capital, and if laborers, like cattle, 
were purchased, instead of being hired, thus becoming 
the property of their employers, they also would be fix- 
ed capital. 

Caroline. And this, I suppose, is the case with the 
poor Africans in the West Indies? 

250. To which description of capital should farming cattle be re- 
Jerred? 251. What objection does Caroline make to Mrs B.'s an- 
swer to the above question ? 252. How does Mrs B. answer the 

objection? 253. What further explanation does Mrs B. make ta 

the objection of Caroline ? 



82 ON CAPITAL. 

Mrs B. Yes, and with slaves of every *description. 
Even the peasantry of Russia and Poland are in gene- 
ral considered as fixed capital, because their state of 
vassalage is such as to amount to slavery, the proprie- 
tors of the land having a right to their labor without re- 
muneration : and the value of an estate in Russia is not 
estimated by the number of acres, but the number of 
slaves upon it ; in the same manner as a West India 
plantation. A similar st^te of vassalage prevailed 
throughout most parts of Europe some centuries ago ; 
but in later times the progress of civilization has been 
such; that I believe every country, excepting Russia and 
Poland, has emancipated the laboring classes, expe- 
rience having proved that the more free and independent 
men are, the more industrious they become, and the bet- 
ter the land is cultivated. 

Caroline. I wish that the West Indian planters could 
be induced to adopt this opinion. 

Mrs B. The time will no doubt arrive when slavery 
will be abolished in every civilized country. But im- 
portant changes ought not to be introduced without ex- 
treme caution. The minds of men should be freed 
from the degrading fetters of ignorance, before they 
can reap advantage from personal emancipation. An 
ingenious author observes " that liberty is an instrument 
with which men may either make their fortune or de- 
stroy themselves ; that they should therefore be taught 
the use of it before it is entrusted to their hands." In 
all cases we shall find that gradual and progressive im- 
provement is invariably conducive to the happiness of 
mankind, whilst sudden and violent revolutions are al- 

254. To which description of property do* slaves belong ? 255. 

In what countries exists what is called vassalage ? 256. What is to 

be understood by vassalage as here explained ? 257. Why has the 

vassalage of Europe been reduced to smaller limits than it formerly 
was ? 259. What supposition is made as to the perpetuity of hu- 
man slavery ? 260. What should precede the emancipation of 

slaves? 261. What remark on the subject is quoted from an in- 
genious author ? 



ON CAPITAL. 83 

ways attended with danger. But we are deviating from 
oyr subject. 

Caroline. Well then, to return to it. I thought at 
first that 1 understood the difference of fixed and circu- 
lating capital perfectly ; but I find upon reflection, that I 
am at a loss to determine to which kind of capital seve- 
ral articles of property belong. For instance, is the 
money laid_out in the improvement of land, fixed or 
circulating capital? 

Mrs B. The money laid out on waste land to bring 
it into a state fit for cultivation, such as inclosing, drain- 
ing, ditching, preparing the soil, &:c. is fixed capital j and 
so is that which is employed in the improvement of land 
already cultivated. If it is the proprietor who lays out 
capital on land which he lets, he receives in remunera- 
tion an increase of rent ; if the farmer, he makes great- 
er profits. But the money laid out in the regular 
course of cultivation, such as ploughing, sowing, reap- 
ing, &:c. consists, as we have before observed, partly in 
fixed and partly in circulating capital. 

Caroline. 1 must say that 1 prefer the employment 
of wealth in the form of circulating, rather than in 
that of fixed capital. Granaries, barns, machine- 
ry, &ic. may be advantageous to the proprietors, but 
they must be injurious to the laboring classes ; for the 
more a man lays out as fixed capital, the less remains to 
be employed as circulating capital, and therefore the 
fewer laborers he can maintain. 

Mrs B. You must always remember that the great- 
est good you can do the laboring classes, is to increase 
the consumable produce of the country. Whilst plenty 
of the necessaries of life is raised, it signifies little to 
whom it belongs ; for whoever may be the proprietors 
of this wealth, they can derive no advantage from it but 

262. Is money laid out in the improvement of land fixed or circu- 
lating capital ?- 263. Why does Caroline prefer that wealth should 

be in the form of circulating capital ? 264. What reply does Mrs 

B. make to her on this point ? 



84 ON CAPITAL. 

by employing it ; that is to say, by maintaining with it 
productive laborers. The more abundant, therefore, 
this wealth is, the more people will be employed. 

Now it is evident that whatever tends to improve or 
facilitate labor, increases the productions of the country ; 
and if fixed capital should eventually occasion the raising 
a greater produce than circulating capital, it must be 
more beneficial to the laborers as well as to the capi- 
talist. 

Caroline. So it appears ; and yet I cannot under- 
stand how this operates with regard to machinery. We 
cannot substitute the powers of nature for human in- 
dustry without throwing people ^out of work. How 
then can the poor derive any benefit from inventions and 
improvements which prevent their being employed ? 

Mrs B. It may appear paradoxical, but it is never- 
theless true, that whatever abridges and facilitates labor, 
will eventually increase the demand for laborers. 

Caroline. Or, in other words, to turn people out of 
work is the most certain means of procuring them em- 
ployment ! This is precisely the objection I was ma- 
king to the introduction of new machinery. 

Mrs B. The invention of machinery, I allow, is at 
first attended with some parfial and temporary incon- 
venience and hardship; but on the other hand, the ad- 
vantages resulting from it are almost incalculable both in 
extent and duration- When any new machine or 
process whatever which abridges or facilitates labor is 
adopted, the commodity produced by it falls in price, the 
low price enables a greater number of persons to be- 
come purchasers, the demand for it increases, and the 
supply augments in proportion ; so that eventually more 
hands are employed in its fabrication than there were 

265. Under what circumstances would fixed capital be more 

beneficial to laborers than circulating capital ? 266. What reply 

does Mrs^B. make to the question — How can the poor derive any 
profit fi'om inventions and improvements which prevent their being 
employed ? 267. How is that the fact ? 



ON CAPITAL. 85 

previous to the adoption of the new process. When, 
for instance, the machine for weaving stockings was 
first invented, it was considered as a severe hardship on 
those who had earned a maintenance by knitting them ; 
but the facility with which stockings were made in the 
loom, rendered them so much cheaper, that those, who 
before were unable to purchase them, could now indulge 
in the comfort of wearing them, and the prodigious in- 
crease of demand for stockings enabled all the knitters 
to gain a livelihood, by spinning the materials that were 
to be woven into stockings. 

Caroline. That was a resource in former times, but 
household spinning is scarcely ever seen since Ark- 
wright's invention of spinning jennies. Where are the 
spinners now to find employment ? The improvements 
in machinery drive these poor workmen from one ex- 
pedient to another, till I fear at last every resource will 
be exhausted. 

Mrs B. No ; that cannot be the case. Where there 
is capital the poor will always find employment. In 
countries possessed of great wealth we see prodigious 
works undertaken. Roads cut through hills, canals uni- 
ting distant rivers, magnificent bridges, splendid edifices, 
and a variety of other enterprises which give work to 
thousands independently of the usual employment of 
capital in agriculture, manufactories and trade. What 
is the reason of all this ? It is in order that the rich may 
employ their capital ; for in a secure and free govern- 
ment no man will suffer any part of it to lie idle ; the 
demand for labor is therefore proportioned to the extent 
of capital. Industry, we have already observed, knows 
no other limits. The capitalist who employs a new ma- 

268. What facts are mentioned concerning the knitting of stock- 
ings ? 269. How does Caroline reply to them ? 270. In the 

erection of what public works will the poor find employment where 

there is great wealth ? 271. To what is the demand for labor 

proportioned ? 



86 ON CAPITAL* 

chine is no doubt the immediate gainer by it ; but it is 
the public who derive from it the greatest and most last- 
ing advantage. It is they who profit by the diminution 
of the price of the goods fabricated by the machine ; and, 
singular as it may appear, no class of the public receives 
greater benefit from the introduction of those processes 
which abridge manual labor, than the working classes, 
as it is they who are most interested in the cheapness of 
the goods. 

Caroline. Well, Mrs B., Imust confess myself van- 
quished, and beg pardon of Mr Watt for having ventured 
to doubt the beneficial effects of his steam-engine ; 
and of sir Richard Arkwright for having found fault with 
his spinning jennies. 

Mrs B. I will read you a passage in Macpherson's 
history of commerce which will show you the degree of 
estimation in which the inventions of Arkwright were 
held by that waiter. 

" If Mr Arkwright made a great fortune, he certain- 
ly deserved it ; for the advantages he conferred upon 
the nation were infinitely greater than those he acquired 
for himself; and iar more solid and durable than a hun- 
dred conquests. Instead of depriving the working poor 
of employment by his vast abridgment of labor, that very 
abridgment has created a vast deal of work for more 
hands than were formerly employed i and it was com- 
puted that in 1785, about 25 years after the invention 
of his spinning jennies, that half a million of people were 
employed in the cotton manufactories of Lancashire, 
Cheshire, Derby, Nottingham, and Leicester. And it 
is but justice to the memory of sir Richard Arkwright 
to say that he was unquestionably one of the greatest 

272. What description of persons is most interested in having 
goods cheap ? 273. What work: is quoted by Mrs B. to corrobo- 
rate her opinions on this subject ? 274. How many persons are 

said to have been employed in the cotton factories of Lancashire, 
Cheshire, Derby, Nottingham, and Leicester, within twentyfive 
years of Arkwright ? 



ON CAPITAL. 87 

friends to the manufacturing and commercial interests of 
this country, and to the interest of the cotton planters iii 
almost all parts of the world, and that his name ought to 
be transmitted to future ages, along with those of the 
most distinguished benefactors of mankind." 

Caroline, This is indeed a magnificent eulogium of 
Sir Richard Arkwright, but not more so, it appears, than 
he really deserves. 

Mrs B. I shall conclude my observations on the 
benefits arising from machinery by reading to you some 
remarks on the invention of printing, extracted from M. 
^ay's excellent treatise on political economy. 

"Au moment ou elle fut employee une foule de copis- 
tes durent rester inoccupes, car on pent estimer qu'un 
seul ouvrier imprimeur fait autant de besogne que 200 
copistes. II faut done croire que 199 ouvriers sur 200 
resterent sans ouvrage. He bien, la facilite de lire les 
ouvrages imprimes, plus grande que pour les ouvrages 
manuscrits, le bas prix auquel les livres tomberent, I'en- 
couragement que cette invention donna aux auteurs pour 
en composer un bien plus grand nombre, soit d'instruc- 
tion, soit d'amusement, toutes ces causes firent, qu'au 
bout de tres peu de temps, il y eut plus d'ouriers im- 
primeurs employes, qu'il n'y avoit auparavant de copis- 
tes. Et si a present on pouvoit calculer exactement non 
sculement le nombre des ouvriers imprimeurs, mais en- 
core des industrieux que Timprimerie fait travailler, com- 
me graveurs de poincons, fondeurs de caracteres, re- 
Meurs, libraires, on trouveroit peut-etre que le nombre 
des personnes occupees par la fabrication des livres est 
cent fois plus grand que celui qu'elle occupoit avant I'in- 
vention de I'imprimerie." 

Caroline. And the number of readers must have 
increased in a still greater proportion. You may recol- 

275. What effect have the improvements in spinning cotton had 

on commerce and the raising of cotton ? 276. From what other 

author is there a quotation made illustrating the subject ? 



88 ON WAGES AND POPULATION. 

lect observing in our conversation on the division of labor, 
that the invention of printing was a circumstance most 
favorable to the diffusion of knowledge. 

Mrs B. Thus you see that capital, whether fixed 
or circulating, invariably promotes the increase of the 
produce of the country ; we may, therefore, I think, 
define capital to be an accumulated produce which tends 
to facilitate future productions. And the capital of a 
country is composed of the aggregate property of all its 
inhabitants. 



CONVERSATION VIL; ^ 

ON WAGES AND POPULATION. 

Extreme limits of Wages. — Wages regulated by the 
proportion which capital bears to population, — 
small capital creates small demand for labor, low 
wages, and great profit to the capitalist. — Increase 
of capital creates greater demand for labor, higher 
wages, and less 'profit to the capitalist. — Necessity 
of raising subsistence before other works are under- 
taken.— -How wages are lowered by the increase of 
population without an increase of capital. — Effect 
of scarcity of provisions on wages — Effect of rais- 
ing wages during a scarcity. — Of a maximum 
price of provisions, — Effect of diminution of pop- 
ulation by sickness on the rate of wages. — It is 
not work but funds that creates a demand for labor. 
Wages m Ireland. — Wages in town and country. 

MRS B. 

In our last conversation I think we came to this con- 
clusion, that capital is almost as beneficial to the poor as 
to the rich ; for though the property of the one, it is by 
its nature destined for the maintenance of the other. 



280. What conclusion was drawn froni the last conversation as to 
utility of increased capital? 



ON WAGES AND POPULATION. 89 

Caroline. It comes to the laborer in the form of 
wages, but as he must allow the capitalist a profit on his 
work, I should like very much to know what proportion 
that profit bears to the wages of the laborer. 

Mrs B. It varies extremely; but the wages of the 
laborer can never be permanently less than will afford 
him the means of living, otherwise he could not labor. 

Caroline. On the other hand, they can never be 
equal to the whole value of the work he produces ; for 
if his master made no profit by him he would not employ 
him. 

Mrs B. Such then are the two extremes of the 
wages of labor, but they admit of many intermediate de- 
grees of variation. If besides furnishing subsistence for 
himself, the wages of the laborer would not enable him 
to maintain a wife and bring up a family, the class of 
laborers would gradually diminish, and the scarcity of 
hands would then raise their wages^ which would ena- 
ble them to live with more comfort and rear a family ; 
but as the capitalist will always keep wages as low as he 
can, the laborer and his family can seldom command 
more than the necessaries of life. 

Caroline. By the necessaries of life, do you mean 
such things only as are indispensably necessary for its 
support ? 

Mrs B. No ; I mean such food, clothing, and gene- 
ral accommodation as the climate and custom of the 
country have rendered essential to the preservation of 
the life, health, and decent appearance of the lowest 
classes of the people. Fuel for instance, and warm 
clothing are necessary articles in this country ; but they 

281. What is said concerning the proportion of profits enjoyed by 
the laborer ? 282. What would be the consequence if the la- 
borer were not to receive enough of the profits to support a fam- 
ily ? 283. Is the laborer able usually more fjthan to support 

his family ? 284. What is to be understood by the necessaries of 

life ? 

8* 



90 ON WAGES AND POPULATION. 

are not so in Africa. Civilization and the progress of 
wealth and manufactures have greatly extended the scale 
of necessaries ; the use of linen is now considered as 
necessary by ail classes of people, and shoes and stock- 
ings in England, at least, almost equally so. Houses 
with glazed windows and a chimney are become neces- 
saries, for if our poor were deprived of such accommo- 
dation, it would very materially increase mortality 
amongst them. In Ireland the peasantry bring up their 
children in a mud cabin, the door of which answers also 
the purposes of window and chimney. 

Caroline. Then would it not be better that the la- 
boring classes here should, like the Irish, accustom them- 
selves to hardships and inconveniences, rather than 
indulge in a degree of comfortable accommodation, the 
privation of which in a season of distress is attended with 
so much misery ? 

Mrs B, No ; I would on the contrary wish rather 
to extend than contract the scale of the necessaries of 
life. There is more health, more cleanliness, more in- 
tellect and more happiness developed in an English cot- 
tage than in an Irish cabin. There is more strength, 
vigor, and industry in an English peasant, who feeds on 
meat, bread, and vegetables, than in an Irish one, who 
subsists on potatoes alone. 

Caroline, No doubt. I would wish the lower classes 
every comfort which they can afford : but their wages 
will not always allov/ them such gratifications. What is 
it that determines the rate of wages ? 

Mrs B. It depends upon the proportion which capi- 
tal bears to the laboring part of the population of the 
country. 

Caroline. Or, in other words, to the proportion 

285. How are children brought up in Ireland ? — \ — 286. What 
comparison does Mrs B. make between the poor of England and of 
Ireland ? 287. T\Tiat determines the rate of wages ? 



ON WAGES AND POPULATION. 91 

which subsistence bears to the number of people to be 
maintained by it ? 

Mrs B, Yes, it is this alone which regulates the 
rate of wages, when they are left to pursue their natural 
course. It is this alone which creates or destroys the 
demand for labor. In order to render it more clear to 
you, let us simplify the question by examining it on a 
small scale — let us suppose for instance that we have 
founded a colony in a desert island ; that the settlers 
have divided the land amongst them and cultivated it for 
their own subsistence, and that being both proprietors and 
laborers, they reap the whole reward of their industry. 
Thus situated, should a ship be wrecked on the coast, 
and some of the crew eiFect their escape to shore, what 
would ensue ? They would furnish a supply of laborers 
who would be dependent on the original settlers for 
maintenance and employment. 

Caroline. But if those settlers have not raised a 
greater quantity of subsistence than is necessary for 
their own use, how can they maintain the new-comers.'* 
Without capital, you know, they cannot employ laborers. 

Mrs B. You are perfectly right. But it is proba- 
ble that the most industrious of them will have raised 
somewhat more subsistence than is absolutely necessary 
for their own consumption. They will possess some lit- 
tle stock in reserve, vdiich will enable them to maintain 
and employ at least a few of the shipv^^recked crew. 
Yet as these poor destitute men will all be anxious to 
share in this little surplus, each will offer his labor in 
exchange for the smallest pittance that will support life. 
Thus the capital of the island being inadequate to the 
maintenance of its population, the competition amongst 

288. What case does Mrs B. suppose to illustrate the rate of 

wages ? 289. What reply does Caroline make ? 290. How 

does Mrs B. answer Caroline ? 291. In what manner will wages 

he reduced to a low rate with the inhabitants of the Island sup- 
posed ? 



92 ON WAGES AND POPULATION. 

the laborers to get employment will render wages ex- 
tremely low, and the capitalist will derive a high profit 
from the industry of his laborers. A small capital, 
therefore, creates but a small demand for labor. 

Caroline. By demand for labor do you mean the 
demand of the poor for work, or of the capitalist for 
workmen. 

Mrs B. Certainly the latter. The demand for 
labor means the demand for laborers, by those who 
have the means of paying them for their work, whether 
it be in the form of wages, maintenance, or any other 
kind of remuneration. 

But what will happen in our colony, when the labor- 
ers shall have richly repaid their employers by the fruits 
of their industry ? 

Caroline. By raising a more plentiful harvest they 
would of course have a more plentiful subsistence. 

Mrs B. The harvest, you must observe, belongs 
not to the men who produced it, but to their masters ; 
how therefore does it follow of course, that the labor- 
ers obtain a larger share of it ? 

Caroline. I suppose that their masters having more 
capital, are willing to bestow a larger proportion of it on 
their laborers. 

Mt-s B. I believe that the capitalist will always make 
as high a pro6t, as he can upon the work of his labour- 
ers ; and that when his capital increases, he will choose 
rather to increase the number of his workmen than the 
rate of their wages. But the power of employing more 
laborers increases the demand for labor; and this, as 
I shall explain to you, eventually raises the wages or 
reward of labor. 

The capital of the settlers will probably be so much 

292. What is meant by demand for labor ? 293. To whom 

would the harvest belong ? 294. To what purpose would the 

capitalist devote his surplus of profits ? 



ON WAGES AND POPULATION. 93 

augmented by the industry of the laborers, that the 
difficulty will no longer consist in maintaining the new- 
comers, but in finding employment for the new capital. 
The possessors of this surplus capital will be eager to 
procure the services of the laborers; one perhaps to 
build a hut, another to fence a field, a third to construct 
a boat, and so on. For the surplus, unless employed, 
will yield no profit ; the competition therefore will no 
longer be amongst the laborers to obtain work, but 
amongst the masters to obtain workmen ; and this will 
necessarily raise the price of wages, and consequently 
diminishes the profits of the capitalist. 

Caroline. Oh, this is very clear. If John offers a 
man a shilling a day to work at his house, and Thomas 
gives eighteen pence to those who will build his boat, 
while James pays two shillings for fencing his field; 
wages must rise to two shillings a day : for if John and 
Thomas did not give as much as James, the latter would 
monopolize all the laborers. 

Mrs B. You see therefore that it is the additional 
capital produced by the labor of these men, which by 
increasing the demand for labor raises their wages. 
Thus whenever capital for the maintenance of labor- 
ers abounds, the capitalist must content himself with 
smaller profits, and allow his workmen a more liberal re- 
muneration. Hence as national opulence Increases, the 
laboring poor are more munificently rewarded, and the 
profits of capital diminish. 

Caroline. Oh, that is charming ! that is exactly 
what I wish. But, Mrs B. if during the second year, 
our colonists employ their laborers in building houses 
and fencing fields, instead of cultivating them, subsis- 

295. How would an increase of capital tend to raise the price of 

labor? 296. How will the amount of profits compare with the 

quantity of capital designed for the maintenance of laborers ? 297. 

What will result from the increase of national opulence, in relation 
to the laboring poor and to the profits of capital ? 



94 ON WAGES AND POPULATION. 

tence will again fall short, and the laborers will be re- 
duced to their former necessitous condition ; unless 
having once experienced such distress, they guard 
against it in future. 

Mrs B. That does not depend on the choice of 
the laborers, who must do the work they are hired to 
perform, of whatever nature it may be. But their em- 
ployers will be careful to provide for their maintenance, 
for they know that those who should neglect to make 
such a provision for their future services would be de- 
prived of them. They cannot work without subsistence, 
nor will they work without an ample subsistence whilst 
any of the colony has it to offer them. If John there- 
fore does not raise so great a harvest as James, he will 
not be able the following year to employ so many work- 
men. Each landed proprietor therefore will take care 
to direct the labor of his workmen towards raising the 
requisite subsistence, before he employs them in any 
other description of labor. 

Now let us suppose that the shipwrecked crew had 
brought wives with them, and reared families : would 
that have affected the rate of wages .? 

Caroline. Their wages would remain the same ; 
but as they would have to maintain their wives and chil- 
dren as well as themselves, they would not fare so well. 

Mrs B. And if there was not food enough for them 
all, the most weakly of the children would die, not pre- 
cisely of hunger, but of some of those diseases which 
want of sufficient and proper food engenders. It is 
evident, therefore, that a laborer ought not to marry 
unless his wages are adequate to the maintenance of a 

298. What evil does Caroline suggest as possible in the second 
year of this colony ? 2.99. How does Mrs B. reply to this sup- 
position ? 300. What question does Mrs B. ask in relation to the 

shipwrecked mariners? 301. When does Mrs B. say a labor- 

er ought to marry. 



ON WAGES AND POPULATION. 95 

family ; or unless he haSj-like your gardener, some little 
provision in store to make up the deficiency. 

Suppose now after several years of prosperity, that a 
hurricane makes such devastation amongst the crops of 
our colonists as to reduce the harvest to one half what it 
was the preceding year. What effect would this have 
on the wages of labor ? 

Caroline. It would of course reduce them, for the 
subsistence would be diminished. But in what manner 
the reduction would take effect I do not exactly see. 

Mrs B. In order to trace its consequences step by 
step, we may suppose that John, finding his capital will 
not maintain more than one half the number of labor- 
ers he before employed, reluctantly discharges the other 
half. These poor men wander about the colony seeking 
for work, but instead of finding any, they meet only 
with companions in distress who have lost their employ- 
ment for similar reasons; thus without resource they 
return to their masters, and intreat to be employed on 
lower terms. John, who had discharged these men, not 
for want of work to give them, but for want of funds to 
pay them, is happy in his reduced circumiStances to em- 
ploy laborers at lower wages. He therefore makes a 
new agreement with them, and determines to discharge 
those whom he had originally retained in his service un- 
less they will consent to work for him on the same terms. 
These men, aware of the difficulty of finding employ- 
ment elsewhere, are compelled by necessity to accept 
the conditions, and thus wages are reduced to one half 
their former rate throughout the colony. 

Caroline. It appears as evident as possible. I have 
only one objection to make, which is, that though this 
may be the case in our colony, it certainly is not so in 

802. What supposition does Mrs B. make of a hurricane, and 
what question does she ask in relation to it ? 303. In what man- 
ner would the hurricane operate in reducing the price of labor ? 

304, What objection does Caroline offer to this ? 



96 ON WAGES AND POPULATION. 

Other places. Wages, so far from being reduced, are, I 
believe, frequently raised during a scarcity ; at least 
there are great complaints amongst the poor if that is 
not done. 

Mrs B. In countries where money is used, the re- 
duction of wages does not take place in the manner I 
have described. In such countries it is unnecessary to 
make any change in the rate of wages, because the 
high price of provisions during a scarcity produces a 
similar effect. If you continue to pay your laborer the 
same wages when the articles of provision on which he 
subsists have doubled in price, his wages are really di- 
minished one half, because he" can procure with them 
only one half of what he did before the scarcity. 

Caroline. But this is a kind of imposition upon the 
poor laborers, who, I suppose, are at least as ignorant as 
I am of political economy, and do not know that a 
shilling is worth more at one time than it is at another, 
and therefore during a scarcity continue to work at the 
usual rate of wages for want of knowing better. 

Mrs B. Knowledge in this instance would only 
teach them that they must bear with patience an una- 
voidable evil. The alternative, for the capitalist, when 
his capital is diminished, is to reduce, either the number 
of his laborers, or the rate of their wages — or rather, 
I should say, the remuneration of their labor ; for the 
wages remain nominally the same. Now is it not more 
equitable to divide the maintenance amongst the whole 
of the laboring class, than to feed some of them amply ; 
whilst the remainder starve ? 

305. How does the case differ where money is used ? 306, 

What is said of paying the laborer the same wages, when the price of 

provisions on which he subsists is doubled ? 307. What does 

Caroline call this mode of paying the poor for their labor ? 308. Of 

what advantage, in this case, would knowledge of the principles of 
political economy be to laborers ? 



ON WAGES AND POPULATION. 



97 



Caroline. No doubt it is ; but would it not, in this 
instance, be allowable for the legislature to interfere, and 
oblige the capitalist to raise the rate of wages in propor- 
tion to the rise of price of provisions, so as to afford the 
laborers their usual quantity of subsistence ? I think 
the rate of wages ought to be regulated by the price of 
bread, as that is the principal subsistence of the poor 5 
so as to enable them to purchase the same quantity of 
bread whatever its price may be. 

Mrs B, Or, in other words, that every man may 
eat his usual quantity of bread, however deficient the 
harvest is in its produce ; for unless you could find 
means to increase the quantity of subsistence, it will 
avail nothing to raise the rate of wages. 

Caroline. Very true ; yet two shillings will pur- 
chase twice the quantity of bread that one will 5 is not 
that true also, Mrs B. ? and yet these truths appear in- 
compatible. 

Mrs B. One of them must therefore be an error ; 
two shillings would not purchase twice the quantity of 
bread that one did if wages were doubled, because pro- 
visions would continue to rise in price in proportion to 
the advance on wages. 

Caroline. But I would prohibit the farmer from 
raising the price of his corn and his cattle, and then 
there would be no necessity for the butcher and the 
baker raising the price of meat and bread. It is not 
just that the farmer, when he has a bad crop, should 
throw his misfortune on the public, and be the only per- 
son who does not suffer from it ; which is the case if he 
raises the price of his produce in proportion to its scarcity. 

310. What does Caroline suppose the legislature might pro- 
perly do relating to the price of labor ? 311. To what does Mrs 

B. suppose this legislative provision would be equivalent ? — 312. Why 

would not such a provision remedy the evil supposed ? -313. What 

further legislative provision for the relief of the poor would Caro- 
line have made ? 

9 



98 ON WAGES AND POPULATION. 

Mrs B. The farmer consumes, as well as produces 
provisions ; and as a consumer he partakes of the evil 
of the advance of price. If he sell his corn for twice 
the usual price, what he consumes at home stands him 
in the same value, for such is the price it would fetch at 
market. 

But supposing it possible to prevent the rise in price 
during the scarcity, what consequences would ensue ? 
Keep in mind the important point, that the harvest has 
yielded but half its usual product ; that whilst the wages 
of labor and the price of provisions undergo no altera- 
tion, the laborers purchase and consume the usual quan- 
tity of food, and at the end of six months 

Caroline. You need not finish the sentence, Mrs B. ; 
at the end of six months the whole stock of provisions 
would be consumed, and the people who excited my 
com.miseration would be starved. 

Mrs B. This would infallibly be the case, were 
such a measure persevered in; but though it has often been 
attempted by sovereigns more benevolent than wise, to 
set limits to the price of provisions, the consequences 
soon became so formidable as to compel the legislature 
to put a stop to a remedy which was ineffectual as it was 
pernicious. *" In the year 1315 England was afflicted 
by a famine, grievous beyond all that ever were known 
before, which raised the price of provision far above 
the reach of the people of middling classes. The par- 
liament in compassion to the general distress, ordered 
that all articles of food should be sold at moderate prices, 
which they took upon themselves to prescribe. The 

*Macpherson's Annals of Commerce. 

314. In what manner does the farmer suffer from the scarcity of 

crops ? 315. What would be the evil, were it practicable to 

have the price of labor and of provisions to undergo no changes, 

in time of scarcity ? 316. When was such an experiment made ? 

317. What did the parliament of England to mitigate the evils 

of the famine in 1315 ? 



ON WAGES AND POPULATION. 99 

consequence was, that all things, instead of being sold 
at or under the maximum price fixed by them, became 
dearer than before, or were entirely withheld from the 
market. Poultry were rarely to be seen. Butchers' 
meat was not to be found at all. The sheep were 
dying of a pestilence, and all kinds of grain were selling 
at most enormous prices. Early the next year parlia- 
ment, finding their mistake, left provisions to find their 
own price. " 

Thus you see the rise in the price of provisions is the 
natural remedy to the evil of scarcity. It is the means 
of husbanding the short stock of provisions, and making 
it last out to the ensuing harvest. Government should 
never interfere, either with the price of provisions or the 
rate of wages ; they will each find their respective level 
if left uncontrolled. 

But to return to our colony. What effect would it 
produce on wages, were some contagious malady to carry 
off one half of the laborers? 

Caroline. It would increase the demand for tb- 
labor of those which remained, and consequently raise 
their wages. 

Mrs B. We generally state, therefore, that when the 
number of laborers remains the same, the rate of wages 
will increase with the increase of capital, and lower with 
the diminution of it ; and that if the amount of capital 
remain the same, the rate of wages will fall as the num- 
ber of laborers increase, and rise as the number of 
laborers diminish ; or, as mathematicians would express 
it, the rate of wages varies directly as the quantity of 
capital, and inversely as the number of laborers. 

Macpherson mentions that "a dreadful pestilence, 

318. What was the consequence of the interference of parlia- 
ment ? 319. What is the natural and effectual remedy to the evil 

of scarcity ? — r-320. What supposition is made as to the occurrence 
of a contagious malady in the island?-—- 321. How would mathe- 
maticians state the rate of wages ? 



100 ON WAGES AND POPULATION. 

which originated in the eastern regions, began its rava- 
ges in England in the year 1 348, and is said to have 
carried off the greater part of the people, especially in 
the lower ranks of life. The surviving laborers took 
advantage of the demand for labor, and the scarcity of 
hands to raise their prices. The king, Edward I., there- 
upon enacted the statute of laborers, which ordained that 
ail men and women under 60 years of age, whether 
of free or servile condition, having no occupation or pro- 
perty, should serve any person of whom they should be 
required, and should receive only the wages which were 
usual before the year 1346, or in the five or six prece- 
ding years, on the pain of imprisonment ; the employers 
being also punishable for giving greater wages. Artifi- 
cers were also prohibited from demanding more than 
the old wages ; and butchers, bakers, brewers, &:c. were 
ordered to sell their provisions at reasonable prices. 
The ' servants having no regard to the said ordinance, 
but to their ease and singular covetise,' refused to serve 
unless for higher wages than the law allowed them. 
Therefore the parliament, by another statute, fixed the 
yearly and daily wages of agricultural servants, artificers, 
and laborers, the payment of tlireshing corn by the quar- 
ter, and even the price of shoes. They also forbade 
any person to leave the town in summer wherein he had 
dwelt in the winter, or to remove from one shore to 
another. 

"Thus were the lower classes debarred by laws, which 
in their own nature must be inefficient, from making any 
effort to improve their situation in life." 

Caroline. I had always imagined that a great demand 
for labor was occasioned by some great work that was 
to be executed, such as digging a canal, making new roads, 

322. What account is given of the pestilence in England, 1348 ? 

323. What enactment did Edv/ard I. make ? 324. What 

statute was passed in relation to servants ? 



ON WAGES AND POPULATION. 101 

cutting through hills, &z;c ; but it seems that the demand 
for labor depends, not so much on the quantity of work 
to be done as on the quantity of subsistence provided 
for the workmen. 

MrsB. Work to be performed is the immediate 
cause of the demand for labor ; but however great or im- 
portant is the work which a man may wish to undertake, 
the execution of it must always be limited by the extent 
of his capital; that is to say, by the funds he possesses 
for the maintenance, or payment of his laborers. The 
same observation applies to the capital of a country, which 
is only an aggregate of the capital of individuals; it can- 
not employ more people than it has the means of main- 
taining. All the waste land capable of cultivation in 
the country might be called work to be done, but there 
can be no demand for laborers to do that work, until a 
sufficient quantity of subsistence has been raised to sup- 
port such an additional number of laborers as would be 
required for that purpose. In our conversation on cap- 
ital we observed, that in countries of large capital, great 
works were undertaken, such as public buildings, bridges, 
iron rail-ways, canals, &:c. All these things are a sign 
of redundance of wealth. 

Caroline, In Ireland I understand that the wages 
of common laborers are much lower than in England : is 
it on account of the capital of that country being less 
adequate to the maintenance of its population ? 

J\Irs B. That is, no doubt, one of the principal causes 
of the low price of labor in that country ; but there are 
many other causes which affect the price of labor, arising 
from the imperfection of its government. The Irish are 

325. On what does the execution ofany undertaking requiring labor 

depend ? 326. Mrs B. says tbe same observation applies to the 

capital of a country — what illustration does she give .'' 327. What 

observation is made of public improvements in countries of great 

capital? 328. Why is labor lower priced in Ireland than in 

England ? 

9* 



102 ON WAGES AND POPULATION. 

far less industrious than the English. Arthur Young, 
in his travels througli Ireland, observes, that " husband- 
ry labor is very low priced but not cheap. Two shillings 
a day in Suffolk is cheaper than sixpence a day, in 
Cork. If a Huron would dig for twopence a day, Ihave 
little doubt but that it may be dearer than the Irishman's 
sixpence. 

Caroline. But, Mrs B., the price of labor does not 
only vary in different countries, but very considerably in 
different parts of the same country. In purchasing some 
cutlery a few days ago, I was shown country and town 
made knives and forks, apparently the same, yet the 
difference in price was considerable. Upon inquiring 
the cause, I was informed that it was owins; to the waees 
being so much higher in London than in the country. 

Mrs B. And if you had inquired the cause of the 
high rate of wages in London workmen, you would 
have heard that it was on account of their being better 
workmen ; the ablest artificers generally resort to Lon- 
don, as the place where their skill will be most duly 
appreciated, and where their employers can best afford 
to reward it. 

It is but just to remunerate laborers according to their 
ability. Your head gardener does less work than any 
of the men under him ; yet he has the highest wages, on 
account of the skill and experience he has acquired. A 
working silversmith has on this account higher wages 
than a tailor or a carpenter. 

But where skill is not requisite, the hardest and most 
disagreeable kinds of labor are best paid : this is the 
case with blacksmiths, iron founders, coal heavers, Sic. 

A consideration is also had for arts of an unwhole- 
some, unpleasant, or dangerous nature, such as painters, 

329. What does Arthur Young say of the Irish ? 330. Why- 
do workmen in large cities, as in London, have high wages ? 331. 

Why do some mechanics receive higher wages than those of other 
trades ? 332. V/here skill is not requisite how is labor paid ? 



ON WAGES AND POPULATION. 103 

niirierSj gunpowder makers, and a variety of other analo- 
gous employments. 



CONVERSATION IX. 

ON WAGES AND POPULATION CONTINUED. 

High wages not invariably accompanying great capital. 
— Great capital and low wages in China. — Small 
capital and high wages in America. — Advantages of 
new settled countries. — Poverty the natural check 
to population. — Great population advantageous only 
when resulting from plenty . — Increasing wealth pre- 
ferable to any stationary capital. — Mistake in en- 
couraging population. — Population of manufactur- 
ing towns. — Industry. — Piecework. 

CAROLINE. 

I HAVE been reflecting a great deal on our last con- 
versation, Mrs B., and the conclusions 1 have drawn 
from it are, that the greater the capital a country pos- 
sesses, the greater number of people it can maintain, and 
the higher the wages of labor will be. 

Mrs B. The greater the stock of subsistence, the 
more people may be maintained by it, no doubt ; but 
your second inference is not at all a necessary conclu- 
sion. China is a very rich countryj and yet wages I 
believe nowhere so low. The accounts v»/hicn travel- 
lers give of the miserable state of the inferior classes, are 
painful to hear ; and their poverty is not the result of 
idleness, for they run about the streets with tools in their 
hands, begging for work. 

333. What determines the number of persons that can be em- 
ployed in a-country ? 334. What accounts do travellers give of 

the lower classes of people in China ? 



1 04 ON WAGES AND POPULATION* 

Caroline. That is owing to the immense population 
of China ; so that, though the capital of the country may 
be very considerable, still it is insufficient for the main- 
tenance of all its inhabitants. 

Mrs B. You should therefore always remember that 
the rate of wages does not depend upon the absolute 
quantity of capital, but upon its quantity relative to the 
number of people to be maintained by it. This is a 
truth which, however simple, is continually lost sight 
of, and hence arise errors without number in political 
economy. If China had ten times the wealth it actu- 
ally possesses, and its population were at the same time 
tenfold as numerous, the people would not be better 
fed. 

America on the other hand, is a country of very small 
capital, and yet wages are remarkably high there. 

Caroline. How do you account for that ? for the 
demand for labor, you know, can be only in proportion 
to the extent of capital. 

Mrs B. The capital of America, though small when 
compared with (hat of the countries of Europe, is very 
considei'able in proportion to the number of people to 
be maintained by it. In America and in all newly set- 
tled countries, as yet thinly inhabited, the wages of labor 
are liigh, because capital increases with prodigious rapid- 
ity. When land is plentiful and productive, and laborers 
to cukivate it scarce, the competition amongst the land- 
holders to obtain laborers is so great as to enable this 
class to raise their demands, and the higher the wages 
the laborer receives, the sooner he has it in his power 
to purchase a piece of land and become landholder him- 
self. Thus the class of laborers is continually passing 
into the class of proprietors, and making room for a fresh 

335, On What is it here said that the rate of wages depends ?^ 

336. What country is mentioned in contrast with China ? 337. 

What is said of America in comparison with Europe ? — — 338. Why 
is labor high in America and other thinly inhabited countries ? 



ON WA*GES AND POPULATION. 105 

influx of laborers, both from the rising generation and 
from emigrations from foreign countrie&. 

Caroline. America has then the double advantage 
of high wages and low price of land 5 no wonder that it 
is so thriving a country. 

Mrs B. The progress of wealth and improvement 
is nowhere so rapid, as in the settlement of a civilized 
people in a new country; provided they establish laws 
for the security of their property, they require no other 
incitement to industry. In the new settlements of Amer- 
ica, where the experienced farmer with his European 
implements of husbandry is continually encroaching on 
the barren wilderness, want is almost unknown, and a 
state of universal prosperity prevails. Y^e may form 
some judgment of the rapid increase of their capital by 
that of their population. The facility with which the 
Americans acquire a maintenance sufficient to bring up 
a family encourages early marriages, and gives rise to 
numerous families; the children are well fed, thriving, 
and healthy ; you may imagine how small are the pro- 
portion that die in comparison to the number born, when 
I inform you that their population doubles itself in about 
twentythree years ! 

Caroline. But does not such an immense increase 
of population reduce the rate of wages ? 

Mrs B. No, because their capital increases in a 
still greater proportion ; and as long as that is the case, 
wages, you know, will rise, rather than fall. But 
what I have said relative to America refers only to the 
United States of that country ; which have the advan- 
tage of a free government protecting the property of all 

339. Where is the progress of wealth and of improvement most 

rapid ? 340. What is said to be the consequence of the facihly 

with which persons in America can bring up a family? 341. 

In what length of time is our population said to double ? 342. 

Why does not the great increase of population in America reduce 
the rate of wages ? 



106 ON WAGES AND POPULATION. 

classes of men. In the Spanish settlements, where the 
government is of a very different description, the condi- 
tion of the people is far less flourishing. The popula- 
tion of Mexico, one of the finest provinces of Spanish 
America, does not double itself in less than fortyeight 
years. 

Caroline. Yet I do not well understand why the 
poor should be worse off in England w^here there is a 
large capital, than in America where there is a small 
one. 

Mrs B. Because you are again forgetting the fun- 
damental rule which I have laid down for you, that capi- 
tal must always be considered with reference to the 
number of people to be employed and maintained by it. 

In England, and all the old established countries of 
Europe, the population has gradually increased till it has 
equalled the means of subsistence; and as Europe no 
longer affords the same facility for the growth of capi- 
tal as a newly settled country, if the population goes on 
augmenting, it may exceed the means of subsistence, 
and in that case the wages of labor will fall instead of 
rising, and the condition of the poor become very 
miserable. 

Caroline. But how is it possible for population to in- 
crease beyond the means of subsistence ^ Men cannot 
live without eating. 

Mrs B. No ; but they may live upon a smaller 
portion of food than is necessary to maintain them in 
health and vigor; children may be born without their 
parents having the means of providing for them. In- 
crease of population therefore under such circumstances 

343. Why has not Mexico flourished as much as the United 
States? — 344, In what time does the population of Mexico double ? — 
345. Why are the poor in countries of Europe where there is a 

large capital worse off than in America ? 343. What is said in 

reply to the question — How it is possible for population to increase 
J)eyoncl means of subsistence ? 



ON WAGES AND POPULATION. 107 

cannot be permanent ; its progress will be checked by 
distress and disease, and this 1 apprehend to be one of 
the causes of the reduced state of the poor in this 
country. 

Caroline. I declare I always thought that it was 
very desirable to hav^e a great population. All rich 
thriving countries are populous : great cities are popu- 
lous ; wealth, which you esteem so advantageous to a 
country, encourages population ; and population in its 
turn promotes wealth, for laborers produce more than 
they consume. You recollect how rich our colony be- 
came by the acquisition of the labor of the shipwrecked 
crew ; their first arrival was attended with some incon- 
venience, it is true ; but 1 should say as you do with re- 
spect to machinery, the inconvenience is small and tem- 
porary, the advantage both durable and extensive. 

Mrs B, You are much mistaken if you imagine that 
I do not consider a great population as highly advanta- 
geous to a country, where there is a capital which will 
afford wages sufficient for a laborer to bring up his chil- 
dren ; for population is not usually increased by the ac- 
quisition of a number of able laborers, (as was the case 
in our colony,) but by the birth of helpless infants who 
depend entirely upon their parents for subsistence. Sf 
this subsistence is not provided, the children are born 
merely to languish a 'lqsn years in poverty, and to fall 
early victims to disease brought on by want and wretch- 
edness. They can neither increase the strength, the 
wealth, nor the happiness of the country. On the con- 
trary, they weaken, impoverish, and render it more 
miserable. They consume without reproducing, they 
suffer without enjoying, and they give pain and sorrow to 

347. What reasons does Caroline give in favor of a large popula- 
tion ? 348. Under what circumstances does Mrs B. consider a 

large population desirable ? 349. How is population usually in- 
creased ? 350. What is the consequence if population, by births, 

increases beyond the means of subsistence ? 



108 ON WAGES AND POPULATION. 

their parents without ever reaching that age when they 
might reward their paternal cares. Yet such is the fate 
of thousands of children wherever population exceeds 
the means of subsistence. 

Caroline. What a dreadful reflection this is ! But; 
you do not suppose that there are any children actually 
starved to death ? 

Mrs B. I hope not, but the fate of those poor in- 
fants is scarcely less deplorable who perish by slow 
degrees for want of proper care and a sufficiency of 
wholesome food. A large family of young children 
would require the whole of a mother's care and atten- 
tion ; but that mother is frequently obliged to leave them 
to obtain by hard labor their scanty meal. Want of 
good nursing, of cleanliness, of fresh air, xmd of whole- 
some nourishment, engenders a great variety of diseases 
which either carry them off, or leave them in such a 
state of weakness, that they fall a sacrifice to the first 
contagious malady which attacks them. It is to this 
state of debility, as well. as to the want of medical ad- 
vice and judicious treatment, that must be attributed the 
mortality occasioned by the small pox and measles 
amongst the lower classes of children, so much greater 
than in those of the upper ranks of society. 

Nor are the fatal effects of an excess of population 
confined to children. A sick man, who might be restored 
to health by medical assistance and a proper diet, perish- 
es because he can afford to obtain neither. A delicate 
or an infirm woman requires repose and indulgence 
which she cannot command. The necessaries ofUfevary 
not only with the climate and customs of a country, but 
with the age, sex, and infirmities of the individuals who 

351. How are diseases among the lower classes of children gene- 
rated ? 352. What diseases in particular are thus produced ? 

353. In what manner does mortality from similar causes extend to 
adult persons ? 



ON WAGES AND POPULATION. 109 

inhabit it ; and wherever these necessaries are deficient, 
mortality prevails. 

Do you understand now why the rate of wages and 
the condition of the poor is better in countries which, 
like America, are growing rich ; than in those which, 
like England, have long accumulated large capitals, but 
whose wealth is either stationary or making but slower 
progress ? 

Caroline. Yes; it is because when capital augments 
very rapidly, plenty precedes the increase of population, 
and labor is in great demand and well rewarded. But 
when wealth, however great, has long been stationary, 
population has risen up to the means of subsistence, or 
perhaps gone beyond it, so that wages fall and distress 
comes on. 

Mrs B. This is what I formerly alluded to when I 
told you that you would find that the acquisition of 
wealth was more advantageous to a country as well as 
to an individual, than the actual possession of it. 

I must read you a passage of Paley on this subject, in 
which he expresses himself with remarkable per- 
spicuity. 

" The ease of subsistence and the encouragement of 
industry depend neither upon the price of labor, nor 
upon the price of provisions ; but upon the proportion 
which the one bears to the other. Now the influx of 
wealth into a country naturally tends to advance this 
proportion ; that is, every fresh accession of wealth raises 
the price of labor, before it raises the price of provisions. 

" It is not therefore the quantity of wealth collected 
into a country, but the continual increase of that quanti- 

354. What answer does Caroline give to this question — Why is 
the rate of wages and the condition of the poor better in countries 
now growing rich, than in those, where large capitals have already 

been accumulated and where wealth is now stationary ? 355. 

What author does Mrs B. quote in proof of what Caroline has said 

upon the subject? 356. What are Paley's remarks upon it? 

10 



no ON WAGES AND POPULATION. 

ty, from which the advantages arise to employment and 
population. It is only the accession of wealth which 
produces the effect ; and it is only by wealth constantly 
flowing into, or springing up in a country, that the effect 
can be constant." 

You must not, however, imagine that the capital of 
this country remains stationary ; on the contrary, we 
are making rapid advances in wealth, though we cannot 
pretend to equal the progress of a new settled country. 
In confirmation of this, Arthur Young observes, that 
wages had risen about one third, both in England and 
Ireland, within the last twenty years ; which proves that 
capital has been increasing in a greater ratio than popu- 
lation. But it must be observed, that it is about thirty 
years since he gave diis account ; and the severe checks 
which 'industry has received since that period through- 
out the greater part of Europe, from a constant state of 
the most expensive warfare, has, I fear, greatly retarded 
the progress of capital ; without equally affecting that of 
population ; but if the increase of the latter has occa- 
sionally outstripped the means of subsistence, it is no 
less owing to the ill-judged conduct of the upper classes 
than to the imprudence of the lov^er orders of people. 

Caroline. You allude, I suppose, to the encourage- 
ment of early marriages amongst the poor ?" 

Mrs B. Yes ; we observed that whe a great popu- 
lation springs from ample means of subsistence, it is the 
highest blessing a country can enjoy ; the children 
brought up in plenty, attain a healthy and vigorous man- 
hood, with strength to defend, and industry to enrich 
their country. Those who have not reflected on the 
subject, have frequently confounded cause and effect, and 
have, with you, considered a great population under all 

357. is wealth supposed to be increasing in England ? -358. 

What does Arthur Young say about it ? 359. What in late years 

has checked the increase of wealth in Europe generally .-' 360. 

What is said of children brought up in plenty ? 



ON WAGES AND POPULATION. 1 1 1 

circumstances as the cause of prosperity. Hence the 
most strenuous efforts have been made, not only by indi- 
viduals, but even by the legislature, to encourage early 
marriages and large families, conceiving that by so doing 
they were promoting the happiness and prosperity of 
their country. 

^ Caroline. This is a most unfortunate error. But 
when population is again reduced, the evil corrects 
itself; for capital being thus rendered more adequate to 
the maintenance of this diminished population, the wages 
of labor will again rise. 

Mrs B. Certainly. But it often happens that as 
soon as the laboring classes find their condition im- 
proved, whether by diminution of numbers, or an aug- 
mentation of capital, which may spring up from some 
new source of industry, marriages again increase, a 
greater number of children are reared, and population 
once more outstrips the m.eans of subsistence ; so that 
the condition of the poor, after a temporary improve- 
ment, is again reduced to its former wretchedness. 

Caroline. That is precisely what has occurred in 
the village near which we live. It was formerly, I have 
heard, but a small hamlet, the inhabitants of which 
gained a livelihood as farmers' laborers. Many years 
ago a cottoiT manufacture was set up in the neighbor- 
hood, which afforded ample employment for the poor ; 
and even the children, who v^ere before idle, could now 
earn something towards their maintenance. This, during 
some years, had an admirable effect in raising the con- 
dition of the laboring classes. I have heard my grand- 
father say that it was wonderful to see how rapidly the 
village improved, how many new cottages were built 

361. How is it said, that individuals and legislatures have some 

times unwisely attempted to increase population? 362. What 

will be the consequence upon population when the laboring classes 

find their condition improved by an increase of wages ? 363. 

What account is given of the establishment of a cotton factory that 
was favorable to the poor ? 



112 ON WAGES AND POPULATION. 

and what numerous families they contained. But this 
prosperous state was not of long duration : in the course 
of time the village became overstocked with laborers, 
and it is now sunk into a state of poverty and distress 
worse than that from which it had so recently emerged. 
Mrs B. You see, therefore, that this manufacture, 
which at first proved a blessing to the village, and might 
always have continued such, was, by the improvidence of 
the laborers, converted into an evil. If the population 
had not increased beyond the demand for labor, the 
manufacture might still have afforded them the advan- 
tages it at first produced. 

Caroline. This then must be the cause of the 
misery which generally prevails amongst the poor in 
manufacturing towns, where it would be so natural to 
expect that the facility of finding work would produce 
comfort and plenty. 

Mrs B. And it proves that no melioration of the 
condition of the poor can be permanent, unless to in- 
dustry they add prudence and foresight. Were all 
men as considerate as your gardener Thomas, and did 
they not marry till they had secured a provision ^m 
family, or could earn a sufficiency to maintain it ; in 
short, were children not brought into the world until 
there was bread to feed them, the distress which you 
have just been describing would be unknown, excepting 
in cases of unforeseen misfortunes, or unless produced 
by idleness or vice. 

Caroline. And is it not to these latter causes that a 
great part of the misery in manufacturing towns should 
be ascribed ? I have heard it observed that skilful 
workmen, who could earn a livelihood by three or four 

364. In what way has that same business become hurtful to the 
poor in this village ? 365. How might this evil have been avoid- 
ed ? 366. In what way can improvements in the condition of the 

poor be made permanent ? 



ON WAGES AND POPULATION. 113 

days' labor in a week, would frequently spend the re- 
mainder of it in idleness and profligacy. 

Mrs B. I believe that it is much more common for 
great gains to act as a stimulus to industry. Like every 
other human quality industry improves in proportion to 
the encouragement it receives, and it can have no greater 
encouragement and reward than high wages. It some- 
times happens, it is true, that workmen act in the way 
you mention, but such conduct is far from being com- 
mon; the greater part when their wages are liberal, 
keep steadily to their work, and if they are paid by the 
piece, are even apt to overwork themselves. 

Caroline. That I have observed. My father lately 
agreed to pay a certain sum for digging a sunk fence 
in our pleasure grounds ; and two of the under-gar- 
deners engaged to do it after the day's work was over. 
1 thought they would repent of their undertaking, when 
they came to such hard labor, after having performed 
their usual task ; but I was astonished at their alacrity 
and perseverance : in the course of a week they , com- 
pleted the job, and received the price in addition to their 
usual wages. I wonder that work is not always paid by 
the piece, it is such an encouragement to industry. 

Mrs B. All kinds of work are not susceptible of 
being so paid ; for instance, the care of a garden could 
not be divided into jobs, and the gardener be paid so 
much for planting trees, so much for cleaning borders, 
so much Tor mowing grass, &zic. Besides, I doubt 
whether it would be desirable that this mode of payment 
should be generally adopted, on acount of the tempta- 
tion it affords to laborers to overwork themselves ; for 

367. What is calculated to excite to habits of industry ? 368. 

What contrary effects does an increase of wages sometimes have on 
laborers ? 369. Whai case does Caroline mention where an in- 
crease of wages excited to greater industry ? 370. What would 

be the evil consequence if laborers were always to be under such an 
excitement ? 

10* 



114 ON WAGES AND POPULATION. 

notwithstanding all the advantages of industry, one 
would never wish it to be pushed to that extreme which 
would exhaust the strength of the laboring classes, and 
bring on disease and infirmity. The benefits resulting 
from industry are an increase of the comforts and con- 
veniences of life ; but it would be paying too dear for 
these to purchase them by a sickly and premature old 
age. 

In order to be of permanent service to the laboring 
classes we must not rest satisfied with encouraging indus- 
try ; but we should endeavor by instruction to awaken 
their minds to a sense of remote consequences, as well 
as of immediate good, so that when they have succeeded 
in rendering their condition more comfortable, they may 
not rashly and inconsiderately increase their numbers 
beyond the means of subsistence. 

Caroline, But if population be constantly kept within 
the limits of subsistence, would it not always remain 
stationary ? 

Mrs B. Certainly not ; if the people are industrious 
capital will increase ; and the increase of population will 
follow of course, and with advantage. 

Caroline. I now see evidently, that population 
should never be encouraged but where there is great 
plenty of subsistence and employment. 

Mrs B. And then it requires no encouragement. 
!f men so often marry without having made any provis- 
ion for a family, there is no danger of their not marrying 
when a subsistence is easily obtained ; and their children 
will be healthy and long lived in proportion as they are 
well fed, clothed, and taken care of. 

371. What are the benefits resulting from industry ? 372. How 

may we render ourselves permanently useful to the laboring classes 

of the community, in exciting them to habits of industry? 373. 

Would not population remain stationary if kept within the limits of 

subsistence ? 374. What will always be a sufficient inducement 

in society for persons to marry .? 



ON THE CONDITION OF THE POOR. 115 

CONVERSATION X. 

ON THE CONDITION OF THE POOR. 

Of the cultivation of commons and waste lands. — Of 
Emigration. — Education of the lower classes. — Ben- 
efit clubs. — Savings Banks. — Parochial relief — 
Alms and private charities. — Rewards. 

CAROLINE. 

In our last conversation, Mr. B., you pointed out the 
evils arising from an excess of population ; they have 
left a very melancholy impression on my mind. I have 
been reflecting ever since whether there might be any 
means of 'averting them, and of raising subsistence to 
the level of population, rather than suffering population 
to sink to the level of subsistence. Though we have 
not the same resource in land as America ; yet we have 
large tracts of waste land, which by being brought into 
cultivation would produce an additional stock of subsist- 
ence. 

Mrs B. You forget that industry is limited by the 
extent of capital, and that no more laborers can be em- 
ployed than we have the means of maintaining ; they 
work for their daily bread, and without obtaining it, they 
neither could nor would work. All the laborers which 
the capital of the country can maintain being disposed 
of, the only question is, whether it be better to employ 
them on land already in a state of cultivation, or in 
breaking up and bringing into culture new lands; and 
this point may safely be trusted to the decision of the 
landed proprietors, as it is no less their interest than thai 

375. What inquiry does Caroline make in the beginning of the 
tenth conversation ? 376. What does Mrs B, in reply say Car- 
oline has forgotten ? 377. What does Mrs B. consider the only 

question, admitted in relation to the melioration of the condition of 
the poor in England ! 



116 ON THE CONDITION OF THE POOR. 

of the laboring classes that the greatest possible quantity 
of produce should be raised. To a certain extent it has 
been found more advantageous to lay out capital in im- 
proving the culture of old land, rather than to employ 
it in bringing new land into tillage | because the soil of 
the waste land is extremely poor and ungrateful, and 
requires a great deal to be laid out on it before it brings 
in a return But there is often capital sufficient for 
both these purposes, and of late years vve have seen not 
only prodigious improvements in the processes of agri- 
culture throughout the country, but a great number of 
commons inclosed and cultivated. 
/ Caroline. 1 fear you will think me inconsistent, 
but ! cannot help regretting the enclosure of commons ; 
they are the only resource of the cottagers for the main- 
tenance of a {^w lean cattle. Let me once more quote 
my favorite Goldsmith : 

" Where then, ah where shall poverty reside. 
To 'scape the pressure of contagious pride ? 
If to some common's fenceless limits stray'd. 
He drives his flock to pick the scanty blade, 
Those fenceless fields the sons of wealth deride, 
And ev'n the bare worn common is deny'd." 

Mrs B. You should recollect that v.'e do not admit 
poets to be very good authority in political economy. 
If instead of feeding a few lean cattle, a common can, 
by being inclosed, fatten a much greater number of fine 
catttle ; you must allow that the quantity of subsistence 
will be increased, and the poor, though in a less direct 
manner, will fare the better for it. Laborers are re- 
quired to inclose and cultivate those commons, the neigh- 
boring cottagers are employed for that -purpose, and this 
additional demand for labor turns to their immediate ad- 

378. What changes in agriculture does she say have recently taken 
place ? 379. What objection does Caroline make to the enclo- 
sure of commons ? 380. How does Mrs B. in reply say the inclo- 

sure of commons is beneficial to the poor ? 



ON I'HE CONDITION of THE POOR* 117 

vantage. They not only receive an ideranity for their 
loss of right of common, but they find purchasers for the 
cattle they can no longer maintain in the proprietors of 
the new inclosures. 

When Finchley Common was enclosed, it was divided 
amongst the inhabitans of that parish ; and the cottagers 
and little shopkeepers sold the small slips of land which 
fell to their share to men of greater property, who thus 
became possessed of a sufficient quantity to make it 
answer to them to inclose and cultivate it; and the poorer 
classes were amply remunerated for their loss of comon- 
age by the sale of their respective lots. 

Caroline, But if we have it not in our power to pro- 
vide for a redundant population by the cultivation of our 
waste lands, what objection is there to sending those who 
cannot find employment at home, to seek a maintenance 
in countries where it is more easily obtained, where there 
is a greater demand for labor ? Or why should they not 
found new colonies in the yet unsettled parts of Amer- 
ica ? 

Mrs B. Emigration is undoubtedly a resource for 
an overstocked population : but one that is adopted in 
general with great reluctance by individuals ; and is com- 
monly discouraged by governments, from an apprehen- 
sion of its diminishing the strength of the country. 

Caroline, It might be wrong to encourage emigra- 
tion to a very great extent ; I meant only to provide 
abroad for those whom we cannot maintain at home, 

Mrs B. Under an equitable government there is 
little danger of emigration ever exceeding that point. 
The attachment to our native land is naturally so strong, 
and there are so many ties of kindred and association 

381. What account is given of Finchley Common in relation to 

this subject? 382. What other method does Caroline propose 

to improve the condition of the poor.' 383. What does Mrs B. 

say of emigrations ? — r. — 384. Why are governments opposed to 

them ? 385. W^hat is there to prevent emigrations so great as to 

be hurtful ? 



118 ON THE CONDITION OF THE POOR. 

to break through before we can quit it, that no slight mo- 
tive will induce a man to expatriate himself. An author 
deeply versed in the knowledge of the human mind says, 
" La seule bonne loi centre les emigrations, est celle que 
la nature a grave dans nos coeurs." On this subject I 
am very willing to quote the Deserted Village : 

"Good heaven ! what sorrows gloom'd that parting day. 
That call'd them from their native walks away." 

Besides, the difficulties with which a colony of emi- 
grants have to struggle before they can effect a settle- 
ment ; and the hardships they must undergo, until they 
have raised food for their subsistence, are so discoura- 
ging, that no motive ess strong than that of necessity is 
likely to induce thern to settle in an uncultivated land. 

Some capital too is required for this as well as for all 
undertakings ; the colonists must be provided with imple- 
ments of husbandry and of art ; and supplied with food 
and clothing until they shall have succeeded in produ- 
cing such necessaries for themselves. 

Were emigration therefore allowed, instead of being 
checked, scarcely any would abandon their country but 
those who could not find a maintenance in it. But should 
emigration ever become so great as to leave the means 
of subsistence easy and plentiful to those who remain, it 
would naturally cease, and the facility of rearing children, 
and maintaining families, would soon fill up the vacancy 
in population. 

There are some emigrations which are extremely 
detrimental to the wealth and prosperity of a country ; 
these however was not occasioned by poverty, but result 

386. What, besides attachment to one's native country, is likely 
to check emigrations ? 387. With what must emigrants be pro- 
vided ? 388. Who are the persons generally that would emi- 
grate to a foreign country ? 389. How might the evil be reme- 
died if an emigration too great should take place? 390. What 

emigrations are particularly detrimental to wealth and national pros- 
perity ? 



ON THE CONDITIONS OF THE POOR. 119 

from the severity and hardships imposed by arbitrary 
governments on particular classes of men. Want of tole- 
ration in religion has caused the most considerable and 
numerous emigrations of this description. Such was 
that of the Hugonots from France at the revocation of 
the edict of Nantz. They were a skilful and industrious 
people, who carried their arts and manufactures into 
Germany, Prussia, Holland, and England, and deprived 
France of some of her most valuable subjects. Spain 
has never recovered the blow which her industry re- 
ceived by the expulsion of the Moors, under Ferdinand 
and Isabella ; not all the wealth of America has repaid 
her for this loss. 

But to return to the population of England ; the more 
we find ourselves unable to provide for an overgrown 
population, the more desirous w^e should be to avail our- 
selves of those means which tend to prevent the evil ; — 
such, for instance, as a general diffusion of knowledge, 
which would excite greater attention in the lower classes 
to their future interests. 

Caroline^ Surely you would not teach political econ- 
omy to the laboring classes, Mrs B.? 

Mrs B. No ; but I would endeavor to give the rising 
generation such an education as would render them 
not only moral and religious, but industrious, frugal, and 
provident. In proportion as the mind is informed, we 
are able to calculate the consequences of our actions : it 
is the infant and the savage who live only for the present 
moment ; those whom instruction has taught to think, 
reflect upon the past and look forward to the future. 
Education gives rise to prudence, not only by enlarging 

891. What countries were benefited by the Hugonots leaving 

France ? 392. In what manner was Spain injured in the time 

of Isabella? 393. How is it thought that the evils of an over- 
grown population in England can be prevented in part ? 394. 

How much of an education would Mrs B. give the poor for this pur- 
pose ? 



120 ON THE CONDITION OF THE POOR. 

our understandings, but by softening our feelings, by 
humanizing the heart, and promoting amiable affections. 
The rude and inconsiderate peasant marries without 
either foreseeing or caring for the miseries he may entail 
on his wife and children ; but he who has been taught to 
value the comforts and decencies of life, will not heed- 
lessly involve himself and all that is dear to him in pov- 
erty, and its long train of miseries. 

Caroline. I am very happy to hear that you think 
instruction may produce this desirable end, since the 
zeal for the education of the poor that has been display- 
ed of late years gives every prospect of success 5 and in 
a few years more, it may perhaps be impossible to meet 
with a child who cannot read and write. 

Mrs B. The highest advantages, both religiouSj 
moral, and political, may be expected to result from 
this general ardor for the instruction of the poor. No 
great or decided improvement can be effected in the 
manners of the people but by the education of the rising 
generation. It is difficult if not impossible, to change 
the habits of men whose characters are formed and set- 
tled ; the prejudices of ignorance that have grown up 
with us, will not yield to new impressions; whilst youth 
and innocence may be moulded into any form you choose 
to give them. But independently of schools and the 
various institutions for the education of youth, there is an 
establishment among the lower classes which is peculiar- 
ly calculated to inculcate lessons of prudence and econ- 
omy. I mean the Benefit Clubs, or Friendly Societies ; 
the members of which, by contributing a small stipend 
monthly, accumulate a fund which furnishes them relief 
and aid in times of sickness or distress. These associa- 



395. What is said of the rude and inconsiderate peasant in rela- 
tion to this subject ? 396. How alone does Mrs B. suppose that 

improvement in the manners of the people can be effected ? 397. 

What societies in England are mentioned as having been pi'oductive 
of much good ? 



ON THE CONDITION OF THE POOR. 121 

lions have spread throughout the country, and their 
good effects are rendered evident by comparing the con- 
dition of such of the laboring classes as. belong to them 
with those of the same district who have no resource in 
times of distress, but parochial relief or private charity. 
The former are comparatively cleanly, industrious, sober, 
frugal, respecting themselves, and respected by others ; 
depending in times of casual sickness or accident on 
funds created by their own industry, they maintain an 
honorable pride and independence of character : whilst 
the latter, in a season of distress, become a prey to dirt 
and wretchedness ; and being dissatisfied with the scan- 
tiness of parish relief, they are often driven to the com- 
mission of crimes. It is above a century since these 
clubs were first instituted ; they have received encour- 
agement both from government and individuals, and have 
spread throughout the country. I dare say that your 
prudent gardener Thomas is a member of one of them. 

Caroline. Yes ; and he belongs to one which can 
boast of peculiar advantages, as most of the gentlemen 
in the neighborhood subscribe to it ; in order, by increas- 
ing the fund, and consequently the amount of the relief 
which the distressed members can receive, to encourage 
the poor to belong to it. 

Mrs B. That is an excellent mode of bestowing 
charity, for you are not only sure that you relieve the 
necessitous, but also the industrious poor. A similar 
plan has been adopted, within these few years, in a vil- 
lage in the neighborhood of London, and has been at- 
tended with the greatest success. Various schemes had 
been devised by the charitable inhabitants of this village 
to relieve the necessities of the poor, and so much was 
done for them by the opulent, that they found little need 

398. What good effects are said to have resulted from them ? 

399. How long since they were established ? 400. What inju- 
ry will result from too great charity bestowed upon the poor ? 

11 



J 22 ON THE CONDITION OF THE POOfi. 

to exert their own industry; whilst the poor in the neigh- 
boring parishes, attracted by the magnificence of the 
charitable donations, flocked to the place; so that not- 
withstanding all their bounty, the rich still found them- 
selves surrounded by objects of penury and distress. 
Convinc"5d at length that they created as much poverty 
as they relieved, they came to a resolution of complete- 
ly changing their system. They established benefit 
clubs ; and the sums which they before gave away in 
alms, were now subscribed to these societies, so as to 
afford very ample relief to its members in cases of dis- 
tress. The consequence was, that the idle poor aban- 
doned the place, and the industrious poor were so well 
provided for, that the village has assumed quite a new 
aspect, and penury and want are scarcely any more to 
be seen. 

An institution has within a short time been established 
in Scotland, and is, i understand, now rapidly spreading 
in England, which is likely to prove still more advan- 
tageous to the lower classes than the benefit clubs. 
" The object of this institution," says the Edinburgh Re- 
view, No. 49, is to open to the lower orders a place of 
deposit for their small savings, with the allowance of 
reasonable monthly interest, and with full liberty of 
v;ithdrawing their money, at any time, either in whole 
or in part — an accommodation which it is impracticable 
for the ordinary banks to furnish. Such an establish- 
ment has been called a Saving Banky 

These institutions give the greatest encouragement to 
industry, by securing the property of the laboring poor. 
How frequently it happens that an industrious man, after 



401. What led to the establishment of charitable clubs in a vil- 
lage near London ? 402. What was the consequence of these 

clubs in that village ? 403. What other institution has been 

established for the benefit of the poor— first in Scotland ? 404. 

What is the plan of it? 405. How do Saving Banks promote 

industry ? 



ON THE CONDITION OF THE POOR. 123 

having toiled to accumulate a small sum, is tempted to 
lay it out in a lottery ticket, is inveigled by sharpers to a 
gambling table, or induced by adventurers to engage in 
some ill-judged and hazardous speculation ; to lend it to 
a distressed or a treacherous friend, — not to mention the 
risk of its being lost or stolen. If we succeed in estab- 
lishing banks in different districts in England, where the 
poor may without difficulty or trouble deposit the trifle 
they can spare from their earnings, and where, as an 
additional inducement, some interest is allowed them for 
their money, all this mischief will be avoided, and we 
may hope that the influence of prudential habits will 
gradually raise the poor above the degrading resource of 
parochial assistance ; and enable us in the course of 
time to abolish the poor rates ; a tax which falls so hea- 
vily on the middling classes of people, and which is said 
to give rise to still more poverty than it relieves. 

Caroline. 1 cannot understand that. 

Mrs B. The certainty that the parish is bound to 
succor their wants, renders the poor less apprehensive 
of indigence than if they were convinced that they must 
suffer all the wretchedness it entails. When a young 
man marries without having the means of supporting his 
family by his labor, and without having saved some lit- 
tle provision against accidents or sickness, he depends 
upon the parish as a never-failing resource. A profligate 
man knows that if he spends his wages at the public 
house- instead of providing for his family, his wife and 
children can at worst but go to the poor house. Parish 
relief thus becomes the very cause of the mischief 
which it professes to remedy. 

Caroline. It appears to me to encourage the worst 
species of poverty, that arising from idleness and ill- 
conduct. 

406. What is said of the poor tax in England ? 407. In what 

way does the parish relief of England cause poverty and wretched- 
uess ? 408. What illustration is given ? 



124 ON THE CONDITION OF THE POOR. 

Mrs B. The greatest evil that results from this pro- 
vision for the poor is, that it lowers the price of labor ; 
the sum which the capitalist is obliged to pay as poor 
rates necessarily reduces the wages of his laborers ; for 
if the tax did not exist, his capital being so much more 
considerable, the demand for labor, and consequently 
its remuneration, would be greater. But the poor rates 
bestow, in the form of alms, but too frequently on the 
idle and profligate, that wealth which should be the 
reward of active industry ; if the amount of the poor 
rates were added to the circulating capital of the coun- 
try, the independent laborer might earn a better liveli- 
hood for himself and his family than he can now do ; 
and, without the degrading resource of parish relief, 
might lay by a portion to provide for sickness and old 
age. 

When it was once proposed to establish a poor's rate 
in France, the committee of mendicity, in rejecting it, 
thus expressed themselves on that of England : 

" Get exemple est une grande et importante lecon 
pour nous, car independamment des vices qu^elie nous 
presente et d\ine depense monstreuse, et d'un encour- 
agement necessaire a la faineantise, elle nous decouvre 
la plaie politique de I'Angleterre la plus devorante, 
qu'il est egalement dangereux pour sa tranquillite, et 
son bonheur, de detruire ou de laisser subsister." 

Caroline. But what is to be done } the poor cannot 
be allowed to starve, even when idle and vicious. 

Mrs B. Certainly not; and besides, the wife and 
children of a profligate man are often the innocent vic- 
tims of his misconduct. Then there are frequently 
cases of casual distress, which no prudence could fore- 

409. How does this parish relief lower the price of labor ? 

410. In what way might the poor be more benefited by another 

application of the same capital ? 411. What is said of the Engl^h 

poor rates by the committee of mendicity in France ?- — -4121, 
Why ought not poor rates to be abolished I 



ON THE CONDITION OF THE POOR. 125 

see nor guard against ; under these circumstances the 
poor rates could not be abolished without occasioning 
the most cruel distress. I know therefore of no other 
remedy to this evil than the slow and gradual effect of 
education ; by enlightening the minds of the lower 
classes their moral habits are improved, and they rise 
above that state of degradation in which all the feelings 
of dignity and independence are extinguished. 

Caroline. But, alas ! how many years will elapse 
before these happy results can take place ! 1 am impa- 
tient that these benefits should be immediately and uni- 
versally diffused ; their progress is in general so slow and 
partial, that there is but a small chance of our living to 
see their effects. 

Mrs B. There is some gratification in looking for- 
ward to an improved state of sociely, even if we should 
not live to witness it. 

Caroline. Since it is so little in our power to accele- 
rate its progress, w^e must endeavor to be contented : 
but I confess that I cannot help regretting the want of 
sovereign power to forward measures so conducive to 
the happiness of mankind. 

Mrs B. You might possibly fail in your projects by 
attempting too much. The emperor Joseph II. endea- 
vored at once to transform a bad government into a good 
one, and by adopting arbitrary and violent measures to 
accomplish his purpose, without paying any regard to 
the habits and manners, the prejudices and ignorance of 
his subjects, created ill-will and opposition, instead of 
cooperation ; and ended by leaving them but Httle m.ore 
advanced than he found them. I cannot too often re- 
peat to you that gradual improvement is always prefera- 



413. How can the condition of the poor be effectually improved ? 
-414. Can this be done speedily ? 415. What did the Em- 



peror Joseph II. attempt to do ? 416. What was his success ?- 

417. What description of improvement is best ? 



326 ON THE CONDITION OF THE POOB* 

ble, and more likely to be permanent than that which is 
effected by sudden revolution. 

But of all modes of bestowing charity, that of indis- 
criminate alms is the most injudicious. It encourages 
both idleness and imposition, and gives the bread which 
should feed the industrious poor, to the indolent and 
profligate. By affording certain support for beggars, it 
trains up people to those wretched means of subsistence 
as regularly as men are brought up to any respectable 
branch of industry. This is more especially notorious 
in catholic countries, where alms-giving is* universally 
considered as a religious duty ; and particularly in those 
towns in which richly endowed convents and religious 
establishments dispense large and indiscriminate dona- 
tions. 

Townsend, in his travels in Spain, tells us, that "The 
archbisljop of Grenada once had the curiosity to count 
the number of beggars to whom he daily distributes 
bread at his doors. He found the men 2000, the 
women 3024, but at another time the women were 
4000. 

".Leon, destitute of commerce, is supported by the 
church. Beggars abound in every street, all fed by the 
convents and at the bishop's palace. Here they get 
their breakfast, there they dine. Besides food at St 
Marca's they receive every other day, the men a farthing, 
the women and children half as much. On this pro- 
vision they live, they marry, and they perpetuate a 
miserable race. Were it possible to banish poverty and 
wretchedness by any other means than by industry and 
unlimited application, benevolence might safely be per- 
mitted -to stretch forth the hand, and without distinction 

418. 'vVhat is said of indiscriminate alms.? 419. What evils 

result from it ? 420. In what countries is this especially the 

case ? 421. What did Townsend say of the beggars in Grenada ? 

422. V/hat description is given of the poverty of Leon, by the 

same writer ? 



ON THE CONDITION OF THE POOR. 127 

to clothe the naked, feed the hungry, give drink to the 
thirsty, and furnish habitations to the desolate. But the 
misfortune is, that undistinguishing benevolence offers a 
premium to indolence, prodigality, and vice." 

Caroline. All this is very true : but you must allow 
that it is extremely painful to pass so frequently as we 
do, objects of distress in the streets, without affording 
them some trifling assistance. 

Mrs B. I cannot blam,e any one for indulging 
feelings of humanity ; to pity and relieve the sufferings 
of our fellow creatures is one of the first lessons which 
nature teaches us : but our actions should be regulated 
by good sense, not blindly directed by undistinguishing 
compassion. We should certainly consider it as a duty 
to ascertain whether the object whom we relieve is in 
real want, and we should proportion our charity not only 
to his distress, but also to his merits. We ought to do 
much more for an industrious family, whom unforeseen 
or unavoidable accidents have reduced to poverty, than 
for one who has brought on distress through want of a 
well regulated conduct. When we relieve objects of 
this latter description, it would be well at the same time 
to bestow a trifling reward on some individual among the 
laboring classes of the neighborhood distinguished for 
his industry and good conduct. This would counteract 
the pernicious effect which cannot fail to be produced by 
assisting the indolent, while we suffer the industrious to 
remain without reward. 

Caroline. But the advantages and comforts derived 
from industry constitute its natural recompense, and it 
seems to require no other reward. 

Mrs B. Nor would it, if a similar result could not 



423. What does he say of undistinguishing benevolence ? 424 . 

What does Mrs B. say is one of the first duties taught us by nature ? 

425. What description of needy individuals are entitled to our 

greatest regards ? 426. In giving to such as are in want through 

their own misconduct, what does Mrs B. advise ? 



128 ON THE CONDITION OF THE POOR. 

be obtained without effort ; but when a hard-working 
laborer observes that the family of his idle neighbor is as 
well provided for as his own — that the hand of charity 
supplies them with what he earns by the sweat of his 
brow— such reflections are apt to produce discontent, 
and tend to check his industry. While, therefore, we 
tacitly encourage idleness by relieving the distress it pro- 
duces, we at the same time discourage that laborious in- 
dustry which passes unnoticed. The value of pecuni- 
ary rewards is increased by their being bestowed as a 
mark of approbation ; so far from exciting a sense of hu- 
miliating dependence, they produce a feeling of a very 
opposite nature, which raises and improves the charac- 
ter — a consciousness of merit seen and approved by 
those to whom the poor look up. Such sentiments sof- 
ten whilst they invigorate the labors of the industrious. 
Thus if help for the distressed, and rewards for the me- 
ritorious poor were to go hand in hand, the one would 
be as much towards the prevention of poverty as the 
other towards relieving it. 

Caroline. I had an opportunity last summer of wit- 
nessing a mode of improving the condition of the labor- 
ing poor, in which the system of rewards was introduced 
with the happiest effect. An extensive piece of ground 
was laid out in gardens by a great landed proprietor in 
Hertfordshire, for such of his laborers as had none at- 
tached to their cottages. He let the ground to them at 
the low rate of sixpence a year each. These gardens 
were sufficiently large to provide an ample supply of com- 
mon vegetables for the laborer's family, and to employ 
his leisure hours in its cultivation ; but not so extensive 
as to tempt him to withdraw his attention from his daily 

427. How is the industrious affected when he sees charily he- 
stowed upon the idle ? 428. How is it said that the value of pe- 
cuniary rewards are increased ? 429. What account is given of 

an experiment in Hertfordshire to improve the condition of the 
poor ? 



ON REVENUE. 129 

labor, and render the produce an article of sale. As a 
further means of exciting industry, the proprietor annu- 
ally distributes three prizes as rewards to those whose 
gardens are found to be in the highest state of cultiva- 
tion. This judicious mode of rewarding industry has 
been beneficial also in producing a spirit of emulation 
amongst the rival gardeners, whose grounds being sepa- 
rated only by paths, the comparative state of each is 
easily determined. 

Mrs B. This is indeed an excellent plan ; the lei- 
sure hours which the laborers might probably have pass- 
ed at the alehouse are occupied in raising an additional 
stock of wholesome food, and the money which v/ould 
have been spent in drinking is saved for a better pur- 
pose — it may form perhaps the beginning of a capital, 
and in process of time secure a litde independence for 
himself and his family. 



CONVERSATION XI. 

ON REVENUE. 

Modes of employing capital to produce revenue. — Which 
of these is most advantageous. — J^aries according to 
the state of the country. — Garnierh observations on 
the employment of capital.-— -Equality of profits af- 
fords a criterion of the due distribution of capital. — 
JVatural arrangement of the distribution of capital. — 
Equality of profits in agriculture^ manufactures, and 
trade. — Why those profits appear unequal. 

MRS B. 

In our last conversation we have in some measure di- 
430. What does Mrs B. say of this plan ? 



130 ON REVENUE. 

gressed from our subject ; but I trust that you have not 
forgotten all we have said upon the accumulation of cap- 
ital. Let us now proceed to examine more specifically 
the various modes in which it may be employed in 
order to produce a revenue or income. Capital maybe 
invested — in Agriculture, Mines, Fisheries, Manufac- 
tures, and Trade. 

Caroline. Of all these ways of employing capital, 
agriculture, no doubt, must be the most advantageous to 
the country, as it produces the first necessaries of life. 

Mrs B. In these northern climates it is almost as es- 
sential to our existence to be clothed and lodged as to 
be fed ; and manufactures are, you know, requisite for 
these purposes. 

Caroline. True ; but then agriculture has also the 
advantage of furnishing the raw materials for manufac- 
tures ; it is the earth which supplies the produce with 
which our clothes are made and our houses built. 

JMi's S. Yet without manufactures these materials 
would not be produced ; it is the demand of the manu- 
facturer for such ardcles which causes them to be raised 
by the farmer ; agriculture and manufactures thus react 
on each other to their mutual advantage. 

Caroline. It may be so ; but still it does not appear 
to me that they can be equally beneficial to the country. 
Manufactures do not, like agriculture, actually increase 
the produce of the earth ; they create nothing new, but 
merely put together under another form the materials 
with which they are supplied by agriculture. 

Mrs B. True; but by such operations they fre- 
quently increase the value of these materials a hundred 

431. In what is it said that capital may be invested ? 432. 

What investment does Caroline consider best ? 433. What is 

the reply of Mrs B. ? 434. What further consideration does 

Caroline offer in favor of agriculture ? 435. But what makes the 

raw materials valuable ? 436. What reason does Caroline still 

give why manufactures cannot be equally beneficial with agricul^ 
ture f 



ON REVENUE. 131 

fold. And you are mistaken if you suppose that agri- 
culture can do more than arrange and combine the par- 
ticles of bodies under a new form. In this respect it 
differs from manufactures merely from the circumstance 
of the process being performed by nature in the bosom 
of the earth, and in a manner which eludes our obser- 
vation. But agriculture is no more capable than manu- 
factures of creating a single new particle of matter ; it is 
merely by a chemical change of combination that it al- 
ters their form and nature, and increases their value. 

Caroline. But in agriculture nature facilitates the 
labors o!" man ; she seems to work together with the 
husbandman ; and provided that he but ploughs the field 
and sow the seeds, she performs all the remainder ofthe 
task. It is nature that unfolds the germe, and raises up 
the plant out of the ground ; she nourishes it with genial 
showers, she ripens it with sun-beams, and leaves the 
farmer little more to do than to gather in the fruits of 
her labors. 

How different is the case in manufactures ! There 
man must perform the whole of the work himself; and 
notwithstanding the aid he derives from his mechanical 
inventions, it is all the result of his own toil ; whether it 
be the labor of the head or the hands, it is all art. 

Mrs B. We are accustomed to speak of art in op- 
position to nature, without considering that art itself is 
natural to man. He is endowed with the faculties of 
invention and contrivance, which give him a considera- 
ble degree of command over the powers of nature, and 
render them in a great measure subservient to his use. 



437. How does Mrs B. say that agriculture differs from manu- 
factures in the production of materials ? 438. By the operation 

of what scientific principle are agricultural products perfected ? 

439. What comparison does Caroline make between the opera- 
tions of nature and of art ? 440. How does Mrs B. say we are 

accustomed to speak of art ? 441. How is man said to have com- 
mand over the powers of nature. 



132 ON REVENUE. 

He studies the peculiar properties of bodies in order to 
turn them to his advantage ; he observes that, hght bo- 
dies float on the surface of the water, and he builds 
himself a boat ; he feels the strength of the wind, and he 
raises sails ; he discovers the powers of the magnet, and 
he directs his course by it to the most distant shores : 
but the water which supports the vessel, the wind which 
wafts it on, and the magnet which guides it, are all na- 
tural agents compelled by the art of man to serve his 
purposes. We cannot, therefore, say that it is in agri- 
culture alone that nature lends us her assistance. The 
miller is as much indebted to nature for grinding his corn 
as the farmer is for raising it. In manufactures her 
share of the labor is sometimes even more considerable 
than in agriculture. You may recollect our observing 
that the effect of machinery in facilitating labor, consisted 
chiefly in availing ourselves of the powers of nature to 
perform the principal part of the work ; and there are 
some processes of art for which we seem almost wholly 
indebted to nature. In bleaching, it is the air and light 
which perform the entire process ; in the preparation of 
fermented liquors, we are ignorant even of the means 
vrhich nature employs to accomplish this wonderful ope- 
ration. In short, it would be difficult to point out any 
species of labor in which nature did not perform a share 
of the task. 

Caroline. That is very true ; and it requires only a 
little reflection to discover how much we owe to her as- 
sistance in every work of art. We could not make a 
watch without the property of elasticity natural to steel, 
which enables us to construct a spring ; nor could the 
spring be fabricated without the natural agency of fire, 
rendered subservient to art. 



442. How do nature and art cooperate in navigation ? 443. 

What is said. of the miller in illustration of this subject? 444. 

What is said of bleaching and the fermentation of liquors ? 445. 

What cases does Caroline mention in which the operations of na- 
ture are necessary to the productions of art.' 



ON REVENUE. 133 

But, Mrs B., in agricuhure we avail ourselves of ma- 
chinery as well as of those secret operations of nature 
Which produce vegetation. 

Mrs B, Undoubtedly we do ; for every tool which 
facilitates manual labor is a machine — the spade and 
hoe, which save us the trouble of scratching up the earth 
with onr hands— the plough and harrow, which still more 
facilitate the process — the flail, which prevents the ne- 
cessity of rubbing out the corn— --and the threshing ma- 
chine, which again diminishes the labor. Machinery is 
however, not susceptible of being applied to rural occu- 
pations with the same degree of perfection as to the arts, 
because the processes of agriculture are extremely di- 
versified, carded on over an exTtensive space, and de- 
pendent to a very considerable degree on the vicissi- 
tudes of the seasons over which we have no control. 

Agriculture, manufactures, and commerce, are all es- 
sential to the well being of a country ; and the question 
is not wnether an exclusive preference should be given 
to any one of these branches of industry, but what are 
the proportions which they should bear to each other in 
order to conduce most to the prosperity of the com- 
munity. 

Caroline. That is all I ask. I never imagined that 
every other interest should be sacrificed to that of agri- 
culture : but I feel persuaded that in this country at 
least, trade and manufactures meet with greater encou- 
ragement than agriculture. 

Mrs B. That is a point on which T cannot pretend 
to decide ; and when you are a little better acquainted 
with the subject, you will be more aware of its diffi- 
culty. 

446. What instances are there in which machinery is subservient 

to the purposes of agriculture ? 447. Why is not machinery as 

susceptible of being applied to rural occupations as to the arts ? 

448. What does Mrs B. say is a proper question in relation to 
agriculture, manufactures, and commerce ? 

12 



134 ON REVENUE. 

Caroline, But surely political economists ought to 
know in what proportions the capital of a country should 
be distributed among these diiFerent branches of in- 
dustry. ^ 

Mrs B. It is not easily ascertained, because these 
proportions vary exceedingly in different countries ac- 
cording to their local situation or peculiar circumstances. 
In America, for instance, or any new country in which 
land is cheap, population but thinly scattered, and capital 
scarce, the prevailing branch of industry will be agricul- 
ture. For in such countries, when a laborer accumulates 
a little money, which (where wages are so high) he is 
soon enabled to do, he is immediately tempted by the 
cheapness of land, to lay it out in a farm ; and though 
the wealth of the Americans is so rapidly increasing, 
they have hitherto found it more advantageous to import 
the greater part of their manufactured goods, than to 
establish manufactures at home, a circumstance not so 
much to be ascribed to a deficiency of capital, as to 
their having a more profitable use for it. 

Caroline, And in England, where the population is 
abundant and land comparatively scarce, we must find it 
advantageous to take their corn in exchange for our 
manufactures. 

Mrs B. No doubt ; if old countries were not to 
purchase elsewhere some part of the agricultural pro- 
duce they consume, new countries would not raise more 
than they required for their own consumption, for want 
of a foreign market to dispose of it. 



449. What does Caroline say political economists ought to know ? 

450. Why is it not easily ascertained in what proportions the 

capital of a country should be distributed among the different 

branches of industry? 451. Why is agriculture the prevailing 

branch of industry in new countries ? 452. On what account 

does Mrs B. say, that most attention has been paid to agriculture to 
the neglect of manufactures ? 453. What would be the conse- 
quence to new countries if old ones did not purchase some part of 
their agricultural produce ? 



ON REVENUE. 135 

In thislpuntry, where land is dear, if a laborer makes 
a little money, he never thinks of purchasing land ; he 
cannot even afford to rent a farm ; but he may set up a 
shop, or invest his capital in the manufacturing line. 

There are other circumstances which affect the des- 
tination of capital ; such as the local situation of a coun- 
try ; if it abounds with rivers and seaports, so great a 
facility for the disposal of its manufactures in foreign 
parts, will render that branch peculiarly advantageous. 

Caroline, So then if agriculture suits one country 
best, manufactures are more profitable to another, and 
thus they mutually accommodate each other. 

Mrs B, Exactly. If in England the proportion of 
capital employed in manufactures be more than is required 
for our own use, it is because we find our advantage 
in supplying other countries with manufactured pro- 
duce; were that not the case, we should be at a loss for 
employment for so large a capital as the country pos- 
sesses. In proportion therefore as the channel of agri- 
culture fills, capital overflows, into those of manufactures 
and trade. Agriculture thus leads to manufacture and 
trade as youth leads to manhood ; the progress of the 
former is the most rapid, the latter adds the vigor and 
stability of mature growth. Gamier, in his introduc- 
tion to his French edition of Adam Smith's Essay, 
remarks on this subject, that, 

"It is almost in every instance an idle refinement to 
distinguish between the labor of those employed in 
agriculture, and those employed in manufactures and 
commerce; for wealth is necessarily the result of 
both descriptions of labor, and consumption can no 
more take place independently of the one than of the 

405. What does a laborer in England who obtains a little money 

beforehand? 455. What other circumstances affect the destination 

of capital? 456. What would be the consequence to capital in 

England were it not for the extensive manufactures there ? 457. 

What comparison is made between agriculture and manufactures and 
epmiKerce?- — 458, What does Garnier say is an idle rejfinement ? 



136 ON BEVENDE, 

Other. It is by their siniultaneous concurrence that anjr 
thing becomes consumable, and of course that it comes 
to constitute wealth. The materials of all wealth origin- 
ate in the bosom of the earth, but it is only by the aid 
of labor that they can ever truly constitute wealth; it is 
industry and labor which modify, divide, and combine 
the various productions of the soil.^ so as to render them 
fit for consumption." 

Caroline. But, Mrs B., though political economists 
cannot specify the proportion of capital which should 
be employed in the several branches of industry, have 
they no means of judging whether they are actually 
employed in that proportion which is n^ost conducive 
to the welfare of a country? Men follow their own taste 
and inclination in the employment of their capital, and 
I fear the public benefit has very little weight in the 
scale. 

Mrs B. Fortunately there is a better guide than 
mere inclination to regulate our choice in the employ- 
ment of capital, and that is interest. Men are induced 
to invest their capital in those branches of industry which 
yield the greatest profits ; and the greatest profits are 
offered by those employments of which the country is 
most in need. 

CarQiine, I do not exactly understand why there 
should be such a perfect coincidence between the wants 
of the public and the interests of the capitalist ? 

Mrs B. The public are willing to give the highest 
price for things of which they stand in greatest need. 
Let ns suppose there is a deficiency of clothing for the 
people, the competition to obtain a portion of it raises 
the price of clothing, and increases the profits of the 

459. What does he say of wealth and the materials of wealth r 

460. What does Caroline say that men will follow ? 461. 

What does Mrs B. say is a better guide than inclination in the choice 

of employment? 462. From what employments proceed the 

greatest profits ? 463. ^ What supposition does Mrs B, make m 

illustration of this subject ? 



ON REVENUE. ] 37 

manufacturer of clothes. What will follow ? Men who 
are making smaller profits by the cultivation of land 
will transfer some of their capital to the more advan- 
tageous employment of manufacturing clothes ; in con- 
sequence of this more clothes will be made, and the 
deficiency will no longer exist and the eager competi- 
tion to purchase them will subside, they will fall in 
price, and reduce the profits of the manufacturer to 
those of agriculture — or should these profits fall still 
lower, the farmer will take back the capital he had 
placed in the manufactures to restore it to agriculture. 

Caroline. Then the profits of agriculture and man- 
ufactures will always be, or at least tend to be, upon a 
footing of equality. 

JMrs B. Yes ; tend to be ; that is a very proper 
qualification, for these changes are not produced on a 
sudden. The tendency to equalization of profits takes 
place not only in agriculture and manufactures, but in 
every other branch of industry. In a country where 
capital is allowed to follow its natural course, it will 
always flow into that channel which affords the highest 
profits, till all employments of capital are nearly upon 
the same level. 

Caroline. You say nearly, why not exactly tlie 
same. 

Mrs B. Because, generally speaking, agricultural 
pursuits are more congenial lo the taste of the majority 
of mankind than manufactures or commerce ; and 
hence in countries where fertile land is to be obtained 
at an easy rate, a man no sooner acquires a little capital 
than he is desirous of purchasing land, and retiring even 
to remote and almost unpeopled districts, where be can 



464. To what do the profits of agriculture and commerce tend ? 

465. Why are they not always equal? 466. How long 

will capital flow into that channel which affords the highest profits ? 

467. Why not flow into it till all employments are exactly upon 

a level ? 

12* 



138 ON REVENUE. 

live as the lord of his little domain; as is the casre in 
America at present. Yet this preference will not lead 
beyond a certain limit, therefore it may be stated that the 
profits of different employments of capital are nearly 
upon a level. 

Caroline. How admirably nature makes all her 
arrangements I The more I learn of political economy, 
the more it appears to me, that the institution of laws 
which control her operations are generally productive of 
greater evil than good. 

Mrs B. That may frequently be the case, but gene- 
rally is too comprehensive a term. Every law that is 
enacted infringes more or less upon the natural order 
of things; and yet J should not hesitate to say that the 
worst system of laws is preferable to no government at 
all. Art, we have observed, is natural to man ; it is 
the result of reason, and leads him onward in the pro- 
gressive path of improvement ; instead of being chained 
down like the brute creation by instinct, he is free to 
follow where inclination leads. But as soon as he 
enters into a state of society he feels the necessity of 
a control which nature has not imposed, and his reason 
enables him to devise one. He enacts laws, vi-hich are 
more or less conducive to his good, in proportion as 
his rational faculties are developed and cultivated. Many 
of these laws, no doubt, are inimical to his welfare ; the 
advantages resulting from the single law of the institution 
of property has conferred a greater benefit on mankind 
than all the evils which spring from the worst system of 
government. 

Caroline. But this level — this equality of profit to 
which you say every branch of industry naturally tends, 



468. What does Caroline say of the institution of laws ? 469. 

What does Mrs B. say of laws ? 470. What is said of art ? 

471, What will man do as soon as he enters into a state of society ? 
472. What does Caroline say of the profits of trade, manufac- 
tures, and agriculture in England ? 



ON REVENtfE. 139 

cannot .yet have taken place in England, since manu- 
factures and trade are here allowed to yield greater 
profits than agriculture. 

Mrs B. You are mistaken in that opinion. It is 
true that it is more common to see merchants and manu- 
facturers accumulate large and rapid fortunes than farm- 
ers. They are a class who generally employ capital 
upon'a much larger scale, hence their riches make a 
greater show. Yet, upon the whole, trade and manu- 
factures do not yield greater profits than agriculture. 

Caroline. I cannot understand why the merchant 
and manufacturer should grow richer than the farmer, 
unless they make larger profits. 

Mr B. You must observe that though a farmer does 
not- so frequently and rapidly amass wealth as a mer- 
chant, neither is he so often ruined. The risks a man 
encounters in trade are much greater than in farming. 
The merchant is liable to severe losses arising from 
contingencies in .trade, such as war, changes of fashion, 
bad debts, v/hich scarcely affect the farmer ; he must 
therefore have a chance of making proportionally great- 
er profits. 

' Caroline. That is to say, that the chances of gain 
must balance the chances of loss ? 

Mrs B. Yes; the merchant plays for larger stake. 
If therefore he be so skilful or so fortunate as to make 
more than his average share of gains, he will accumu- 
late wealth with greater rapidity than a farmer; but 
should either a deficiency of talents or of fortunate cir- 
cumstances occasion an uncommon share of losses, he' 
may become a bankrupt. 

Caroline. But, Mrs B. you should, on the other 
hand, consider that the farmer is exposed, to the risk 

473. How does Mrs B. reply to her? 474. Why should a 

merchant make larger profits than a farmer ? 475. On what 

does a merchant's success depend ? 476. To what risks is the 

farmer exposed ? 



140 ON Revenue. 

attending the uncertainty of the seasons, a cause which 
is continually operating, and over which we have no con- 
trol. 

Mrs B. Yet, in these climates, the losses occasioned 
by such causes are seldom attended with ruinous conse- 
quences ; for seasons which prove unfavorable to one 
kind of produce are often advantageous to another. And 
besides, the produce of agriculture consisting chiefly of 
the necessaries of life, the demand for it cannot well be 
diminished ; the price, therefore, will rise in proportion 
to the sc-arcity. Farmers, you know, are sometimes 
accused of making the greatest gains in a bad harvest ; 
though I do not believe that to be the case. 

We may then conclude that though agriculture, manu- 
factures, and trade, do upon the whole afford similar 
profits, these profits are amongst farmers more equally 
shared than amongst merchants and manufacturers, 
some of whom amass immense wealth whilst others be- 
come bankrupts. 

The rate of profits, therefore, upon any employment 
of capital is proportioned to the risks with which it is 
attended ; but if calculated during a sufficient period of 
time, and upon a sufficient number of instances to afford 
an average, all these different modes of employing capi- 
tal will be found to yield similar profits. 

It is thus that the distribution of capital to the several 
branches of agriculture, manufactures, and trade, pre- 
serve a due equilibrium, which, though it may be acci- 
dentally disturbed, cannot, whilst allowed to pursue its 
natural course, be permanently deranged. If you are 
well convinced of this, you will never wish to interfere 
with the natural distribution of capital. 

477. AVhat does Mrs B. say of these lisks of the farmer ? 478. 

What security has the farmer against losses in this way, from the 

rise of provisions ? 479. How are the profits of agriculture 

shared among farmers, as to equality ? 480. When will all the 

different modes of employing capital, be found to yield similar pro- 
fits? 



ON REVENUE. 141 

You must not, however, consider this general equal- 
ity of profits as being fixed and invariable, even in coun- 
tries where government does not interfere with the di- 
rection of capital. A variety of circumstances occasion 
a temporary derangement of it. The invention of any 
new branch of industry, or the improvement of an old 
one, will raise the profits of capital invested in it ; but no 
sooner is this discovered, than others, who have capital 
that can be diverted to the new employment, engage in 
this advantageous concern, and competition reduces the 
profits to their due proportion. A remarkably abundant 
harvest may occasionally raise the rale of agricultural 
profits, or a very bad season reduce them below their 
level. The opening of a trade with a new country, or 
the breaking out of a war which impedes foreign eom^ 
merce, will affect the profits of the merchant : but these 
accidents disturb the equal rate of profits, as the winds 
disturb the sea ; and when they cease, it returns to its 
natural level. 



CONVERSATION XII. 

ON REVENUE DERIVED FROM PROPERTY IN LAND. 

On rent. — High price of agricultural produce the effect, 
not the cause of rent. — Causes of rent ; 1 . The fer- 
tility of the earth ; 2. Diversity of soil and situation 
requiring different degrees of expense to raise simiz 
lar produce. — Origin of rent. — Rent increases posi' 
tively in a progressive country, and diminishes rela- 
tively. — High price of raw produce necessary to 
proportion the demand, to the supply. — Monopoly of 
land. — Monopoly defined. 

CAROLINE. 

I HAVE been reflecting much upon the subject of re- 

481. Is this equality of profits fixed and invariable? 482, 

What circumstances cause variatios ? 



142 REVENUE FROM LANDED PROPERTY. 

venue, Mrs B. ; but I cannot comprehend how farmers 
can afford to pay their rent if they do not make more 
than the usual profits of capital. I had imagined that 
they began by raising greater produce from the same 
capital than merchants or manufacturers, but that the 
deduction of their rent eventually reduced their profits 
below those of other branches of industry. 

Mrs B. You were right in the first part of your 
conjecture, but how did you account for the folly of 
farmers in choosing a mode of employing their capital 
which after payment of their rent yielded them less than 
the usual rate of profit ? 

Caroline. I believe that I did not consider that point. 
I had some vague idea of the superior securit}^ of landed 
property; and then I thought they might be influenced 
by the pleasures of a country life. 

Mrs B. Vague ideas will not enable us to trace 
inferences with accuracy, and to guard against them 
we should avoid the use of vague and indeterminate 
expressions. For instance — when you speak of the 
security of landed property being advantageous to a far- 
mer, you do not consider that in the capacity of farmer 
a man possesses no landed property ; he rents his farm ; 
\{ he purchases it, he is a landed proprietor as well as a 
farmer. It is not therefore the security of landed proper- 
ty which is beneficial to a farmer, but the security or 
small risk in the raising and disposing of his crops. 

A farmer when he reckons his profits, takes his rent 
into consideration ; he calculates to make so much by 
the produce of his farm as will enable him to pay his 
rent besides the usual profits of his capital ; he must 
expect therefore to sell his crops so as to afford that 



483. What difficulty has Caroline suggested as to farmers paying 

their rent? 484. What distinction is made between a farmer 

and a landed proprietor ?— ^ — 485. W^hat is the principal security of 

the farmer against loss ? 486. What is said of the relative profit? 

produced by farmers ? 



REVENUE' FROM LANDED PROPERTY. 143 

profit, otherwise he would not engage in the concern. 
Farmers then really produce more by the cultivation 
of land than the usual rate of profit ; but they are not 
great gainers by it, because the surplus is paid to the 
landlord in the form of rent. 

Caroline. So then they are obliged to sell their 
produce at a higher price than they would otherwise 
do, in order to pay their rent : and every poor laborer 
who eats bread contributes towards the maintenance of 
an idle landlord ! 

Mrs B. You may spare your censure, for rent does 
not increase the price of the produce of land. It is 
because agricultural produce sells for more than it costs 
to produce, that the farmer pays a rent. Rent is there- 
fore the effect and not the cause of the high price of 
agricultural produce. 

Caroline. That is very extraordinary ! If landed 
proprietors exact a rent for their farms, how can farmers 
afford to pay it, unless they sell their crops at a higher 
price for that purpose ? 

Mrs B. A landlord cannot exact what a tenant is 
not willing to give ; the contract between them is volun- 
tary on both sides. If the produce of a farm can 
he sold for such a price as will repay the farmer the 
usual rate of profit on the capital employed, and yet 
leave a surplus, farmers will be found who will willingly 
pay that surplus to the landlord for the use of his land. 

Caroline. But if the profits of agriculture are not 
the effect of rent, why are they not reduced by com- 
petition, and brought down to the usual rate of profit ? 
Why does not addittonal capital flow into that channel, 



487. Are farmers enriched by these profits ? 488. Does Mrs B. 

suppose that rent increases the price of land ? 489. Why not ? 

490. What does Mrs B. say of the contract between the landlord 
and the tenant? 491. What question does Caroline ask in rela- 
tion to the profits of agriculture ? 



144 REVENUE FROM LANDED PROPERTY* 

and by increasing the supply of agricultural produce 
reduce its price ? 

Mrs B. In the first place, agriculture is not suscep- 
tible of an unlimited augmentation of supply, like manu- 
factures. If hats and shoes are scarce, and sell at 
extraordinary high prices, a greater number of men 
will set up in the hat and shoemaking business, and by 
increasing the quantity of those commodities reduce their 
price. But land being limited in extent, farmers can- 
not with equal facility increase the quantity of corn and 
cattle. It might however be done to a very consider- 
able extent by improvements in husbandry, and bring- 
ing new lands into cultivation. But, in the second place, 
to whatever extent this were accomplished, it would not 
have the effect of permanently diminishing the price of 
those commodities, which constitute the necessaries of 
life, because population would increase in the same pro- 
portion, and the additional quantity of subsistence would 
therefore be required to maintain the additional number 
of people ; so that there would remain (after allowing 
a short period for the increase of population) the same 
relative proportion between the supply and the demand 
of the necessaries of life, and consequently no perma- 
nent reduction of price would take place ; the neces- 
saries of life therefore differ in this respect from all 
other commodities ; if hats or shoes increase in plenty 
they fall in price, but the necessaries of life have the 
peculiar property of creating a demand in proportion 
to the augmentation of the supply. 

Caroline. But what is it that makes agricultural 
produce sell at so high a price as to afford a rent f If 



492. Is agriculture susceptible of an unlimited augmentation ? 

493. How is this illustrated ? 494. If agriculture were 

susceptible of great augmentation, what would be the consequence, 

so far as the price of the necessaries of life is considered ? 495. 

What peculiar property have the necessaries of life ? 



REVENUE FROM LANDED PROPERTY* l45 

k is not rent th^t occasions tlie high prices, there must 
be some other cause for it. 

Mrs B. There are several circumstances which 
concur to raise and maintain the price of agricultural 
produce above its cost of production, and enable the 
farmer to pay rent. Its first source is what upon a 
superficial view would seem to have the effect of 
diminishing price; it is that invaluable quality with 
which Providence has blessed the earth, of bringing 
forth food in abundance; an abundance more than 
sufficient to maintain the people who cultivate it. For 
if those who occupy the land and raise the crops con- 
sume the whole of them, there would be no surplus to 
sell at any price to others ; and under such circum- 
stances it would be impossible that the cultivator of the 
soil should pay rent. But tlie natural fertility of the 
earth ^is such as to render almost all soils capable of 
yielding some surplus produce which remains after the 
farmer has paid all the expenses of cultivation, including 
the profits of his capital. It is from this fund that he 
pays his rent. The quantity of this surplus produce 
varies extremely, according to the degree of fertility 
of the soil, and enables a farmer to pay a higher or 
lower rent. 

Caroline. But, Mrs B., in countries newly settled, 
where the greatest choice of fertile land is to be had, 
and where we are told that the harvests are so produc- 
tive, as in many parts of America, no rent is paid. 

Mrs B. Wherever land is so' plenriful that it may 
be cultivated by any one who takes possession of it, 
of course no man will pay a rent. But the cultivator 
nevertheless makes such a surplus produce as would 
enable him to pay rent. The only difference is, that 

496. What is said of the fertility of the earth ? 497. How 

does this tend to raise the price of agricultural products ? 498, 

What objection does Caroline offer to this ? 499. What is the 

difference whether the farmer pay rent or not ? 

13 



iid REVENUE FBOM LANDED PROPERTY, 

instead of transferring it to a landlord, he keeps the 
whole himself. This is the reason that such rapid 
fortunes are made by new settlers in a fine climate and 
a fertile soil. 

It is the fertility of the soil then which enables the 
cultivator to pay rent ; but we must look for another 
cause which induces him to do so. 

Caroline. You speak as if it were left to his option, 
Mrs B. ; and if that were the case, I do not think that 
rent would ever be paid. 

Mrs B. We shall see presently how far you are 
right. — When a newly settled country increases in capi- 
tal and in population, fresh land is taken into cultivation, 
and after all the most fertile districts are occupied, soil 
of an inferior quality, or less advantageously situated, 
will be brought under tillage. Now, corn, or any agri- 
cultural produce, raised upon less fertile soils, will stand 
the farmer in a greater expense, more labor, more 
manure ; and more attention will be required to raise a 
less abundant crop, and the cost of its production will 
upon the whole be greater. 

Caroline. The original settlers who had the first 
choice of the land have then an advantage over the oth- 
ers ; they will make the greatest profits, and accumulate 
fortunes soonest. For the several crops, when brought 
to market, if of the same quality, will sell for the same 
price, whatever difference there may have been in the 
cost of their production. Nay, it is even likely that the 
crops which cost the least in their production, may fetch 
the highest price ; for the most fertile soil will, in all 
probability, yield the finest produce. 

Mrs B. The first settlers have also another advan- 
tage ; they will have selected the most favorable situa- 

500. What will be the state of agriculture in a newly settled 
country, as capital and population increase ? 501. What advan- 
tage in agriculture have the original settlers of a country over 
others ? 



REVENUE FROM LANDED PROPERTY. 147 

tions as well as the most fruitful soil ; their fields will 
flourish on the borders of a navigable river, or surround 
the town which they have built ; affording them a re- 
source both for a home and a foreign market. Whilst 
those who cultivate land in more remote parts must add 
all the charges of conveyance to the market where the 
produce is sold, or the port from whence it is exported. 
Let us suppose that the first settlers make 30 per cent, 
whilst the latter make only 20 per cent of their capital. 
With the double advantage of the most fertile soil, and 
free from rent, it is no wonder if the first settlers should 
rapidly amass large capitals, and it is not improbable 
that towards the decline of life they may be desirous of 
retiring from the fatigues of an active life, yet without 
wishing to sell their property. Under these circum- 
stances, do you not think that they would readily find 
new settlers, who, rather than undertake to cultivate re- 
mote districts, of perhaps a still inferior soil, would pay 
an annual sum for the use of their land, and become 
their tenants ? 

Caroline. That is very true : it would answer to the 
new comers to give the 10 per cent which the first set- 
tlers make above the others, in consequence of having 
the most eligible land. 

Mrs B. This, then, is the origin of rent. If the 
tenant pay 10 per cent, which is equal to the one third 
of what the proprietor made by cultivation, his profits 
will be reduced to 20 per cent, and will consequently 
be upon a level with those of the second setders, who 
remain both proprietors and farmers ; and thus the pro- 
fits of the farmer are reduced from 30 to 20 per cent. 

Caroline. And those of other branches of industry 

502. What advantage of situation as well as of choice in soil have 

the first settlers of a country ? 503. What illustration is given of 

this ? 504. What supposition does Mrs B. make of agriculturists 

who become rich ? 505. What comparison is made between 

farmers and those who are land proprietors and farmers too .' 



148 REVENUE FROM LANDED PROPERTT. 

Will, I suppose, be reduced to the same rate, in order to 
maintain the level of equality of profits? 

Mrs B. Of course. But when the profits of agri- 
culture are 20 per cent, accumulation will still proceed 
with rapidity ; and as the country grows rich and popu- 
lous, the demand for corn will increase, and fresh land 
will be required to be brought into cultivation. The 
new land being either more remote, or of an inferior 
quality, will be cultivated under still greater disadvan- 
tages, and will not yield, let us suppose, above 10 per 
cent profits. As soon as this happens, the second set- 
tlers will be able to obtain a rent for their land. For it 
will be as advantageous to a farmer to pay 10 per cent 
whilst he makes 20, as to give nothing for the use of 
the land when he makes only 10 per cent of his 
capital. 

The general profits of capital are thus again reduced, 
from 25 to 10 per cent. 

Caroline, But do not those who first rented land 
continue making 20 per cent by cultivating it? 

Mrs B. Only as long as their leases last ; for as 
soon as their landlords find that the profits of capital are 
reduced to 10 per cent, they will not allow their tenants 
to make more, but require all the surplus profits above 
that sum to be paid them in the form of rent. Thus 
every fresh portion of, land that is taken in cultivation, 
either of inferior quality or less favorably situated, pro- 
duces the double effect of raising rents and reducing the 
profits of capital. 

Caj'oline. But if profits continue to decrease with 

506. When the profits on agriculture are 20 per cent, what is 

said of the accumulation of wealth ? 507. How is it supposed 

that the profits will be reduced from 20 to 10 per cent ? 508. 

Under what circumstances may the farmer as well pay rent as to 

cultivate land without rent? 509. Do those, who first rented 

land, in the case supposed, continue making their 20 per cent ? • 

510. What will be the consequence when a fresh supply of land is 
taken into cultivation ? 



KEVENUE FROM LANDED PROPERTY. 149 

every fresh portion of land that is ploughed up, they 
will, in the course of time, be reduced to nothing ; and 
then the progress both of cultivation and of population 
must stop, else there will be a scarcity of food. 

Mrs B, As soon as that scarcity is felt, corn will 
rise in price, and this by increasing the profits of the 
farmer will induce him again to take new land into cul- 
tivation. This occurs more or less at every progressive 
step made in agriculture, and prevents the profits from 
being reduced to nothing. Every time that new land is 
brought into culture, the price of raw produce, and con- 
sequently the profits of farming, must have previously 
risen. No new land can be cultivated till capital has 
accumulated to maintain and employ a greater number 
of laborers. And no new land will be cultivated till 
population has so far increased as to raise the price of 
corn, and make it answer to the agricuhurist to break up 
new land for tillage. 

Caroline. And when the crops from the new land 
come to market, I suppose corn will again be reduced in 
price ? 

Mrs B. Yes ; or what comes to the same, wages 
will rise : but the fall from this cause will only be tem- 
porary ; for when higher wages enable a laborer to rear 
a greater number of children, population will, in the 
course of time, again outstrip the progress of capital, 
and the same consequences will again recur. Thus 
agricultural produce and population alternately take the 
lead. But independently of the temporary rise and fall 
in the price of corn which they occasion, every fresh 
portion of land, that is taken into cultivation, diminishes 
the profits of capital, and raises the rent of land, and the 

511. When will corn rise in price ? 512. When can new 

land be cultivated ? 513. When will it be cultivated ? 514. 

What will be the consequence when crops from the new lands come 

to market ? 515. How are the profits of capital affected by the 

cultivation of new lands ? 

IS* 



150 REVENUE FROM LANDED PROPERTY. 

price of raw produce ; for in proportion as recourse 
must be had to land of an inferior quality to provide 
food for the increasing population, the expense of pro- 
ducing it is increased. For every quartern of corn, and 
loaf of bread, whether raised on the finest soils at the 
least cost of production, or yielded by land the most 
unfavorably circumstanced, will fetch the same price in 
the market. 

Caroline. It is curious enough to think that of two 
similar loaves of bread brought on table, the cost of pro- 
duction of one of them may perhaps have been nearly 
twice as much as that of the other; and that one may 
have paid three pence, whilst the other has only paid a 
halfpenny towards the rent. 

The price of rav^ produce in general is then regulated 
by the expense of producing it on soils of the worst qual- 
ity, or the most disadvantageously situated? ^ 

Mrs B. Yes; provided you include in the cost of 
production the profits of the farmer, for though the worst 
soils may not afford a rent, they must bring the cultiva- 
tor a profit ; and if the produce of such land ceased to 
aiford him profits, it would be thrown out of cultivation. 

Caroline, The high price of agricultural produce is 
then owing to the necessity of raising part of it at an ad- 
ditional expense on inferior soils. 

Mrs B. Yes; for this has at the same time the effect 
of raising the rents of the land of superior quality. We 
may, therefore, define rent to be that part of the surplus 
produce of the land which remains after all the expenses 
of cultivation are deducted. 

Caroline. Under such disadvantages I only wonder 
that the price of corn, and of rav.^ produce, should not 
be higher than il is. 



516. What does Caroline mention as a curious fact? 517. 

By what is the price of raw produce regulated ? 518. To what 

is the high price of agricultural produce owing? 519. What 

definition is given of rent? 



REVENUE FROM LANDED PROPERTY. 151 

Mrs B. The natural rise in the price of raw pro- 
duce, owing to the cultivation of inferior soils, is in a 
great measure counterbalanced by other circumstance 
' Every year improvements are made in agriculture, which 
increase the produce without proportionally increasing 
the expenses of cultivation, and enable corn to be brought 
cheaper to market. Besides, though land of an inferior 
quality is at first cultivated at an additional expense, 
it improves by tillage, so that the cost of production grad- 
ually diminishes, and by draining, manuring, and other 
meliorating processes of agriculture, an ungrateful soil 
is in the course of time not unfrequently rendered fertile. 
Disadvantages of situation are also remedied with the 
progress of society, the neighborhood increases in popula- 
tion, new towns are built and new markets opened ; if 
therefore it were not indispensably necessary to continue 
bringing fresh land into cultivation to provide for an ever 
growing population, corn would be produced at less ex- 
pense, and would fall instead of rising in price. 

Caroline. But if all the surplus produce which 
remains, after the expenses of production are deducted, 
go to the landlord in the form of rent, improvements in 
agriculture will not lower the price of raw produce, but 
will increase the rent. 

Mrs B. I beg your pardon ; you have just observed 
that the price of raw produce in general is regulated by 
the expense of producing it on soils of the worst quality, 
and the most disadvantageously situated ; therefore, the 
more we diminish the expet^se of raising it on such soils, 
and the more we can remedy the disadvantages of situa- 

520. What consequences result' from improvements in agricul- 
ture ? 521. What is said of poor soils, when improved by culti- 
vation ? 522. Yiow are disadvantages of situation remedied ? 

523. Vvhat does Caroline say of the effect on the price of raw pro- 
duce from improvements in agriculture? 524. What reply 

does Mrs B. make to this .' 



152 REVENUE FROM LANDED PROPERTY. 

tion, the lower we shall fix the standard price of raw 
produce. The cost of production of a loaf of bread 
raised on land of the lowest description is now one shil- 
ling ; if by improvements in agricultural labor we could 
reduce it to tenpence, bread in general would sell at that 
price. 

Caroline. All this is perfectly clear ; but I am not 
at all pleased to learn that as a country advances in the 
accumulation of wealth, rent, the portion of the idle 
landlord, augments, while profits, the proportion of the 
industrious farmer, diminishes. 

Mrs B. The idle landlords, of whom you complain, 
neither lower the profits of capital nor raise the price of 
agricultural produce. If you understand what I have 
said on rents, you must be aware that the reduction of 
profits is occasioned by the diversity of soils successively 
brought into cultivation, and that the natural high price 
of agricultural produce is owing to the surplus which 
remains after all the expenses of cultivation are defrayed. 
Were rents, therefore, to be abolished, the only effect 
produced would be to enable the farmers to live like 
gentlemen, as they would be enriched by that share of 
the produce of their farms which before fell to the lot of 
the landlord. 

Caroline. And would not that be a very desirable 
change? Is it not better that those who labor should 
grow rich, rather than those who live upon the fruits of 
the labor of others ? 

Mrs B. The yeomanry are a class of farmers who 
cultivate their own property ; and if you vvish to encour- 
age their industry you must a low them to reap the full 

525. What is said of the price of bread in illustration of this ? 

526. V/ith what does Caroline say she is not pleased ? 527. 

Does Mrs B. think th3 landlords to blame ? 528. By, what is 

the reduction of profits occasioned ? 529. What would be the con- 
sequence if rents were abolished ? 530. What question is pro- 
posed by Caroline in relation to abolition of rents ? 531, Who 

are the yeomanry. 



REVENUE FROM LANDED PROPERTY. 153 

r sward of their labors, — to accumulate wealth, and when 
wealthy to indulge in ease and repose, and to let their 
land to others, they prefer this plan to that of cultivating 
it themselves. Were landed proprietors prohibited from 
letting their land when rich, they would nevertheless 
become idle, and would neglect the farming business, 
which, being left to the care of servants, the cultivation 
would suffer, and the country, as well as the proprietor, 
be injured by the diminution of produce. In civilized 
countries, landed property has been obtained by industry, 
or by wealth, the fruits of industry, and should be se- 
cured in its full value, not only to the individual who has 
earned it but to his heirs for ever. 

Besides though it is true that rents rise as a country 
advances in prosperity, this rise is not in proportion to 
the increasing produce of the soil. Rent formerly used 
to bring in to the landlord one third of the produce of 
his land ; it has since fallen to one fourth, and has lately 
been estimated as low as one fifth; so that the landlord, 
whilst he receives a higher rent, has a smaller share of 
the whole produce. 

Caroline. That is some consolation. But could no 
means be devised to abolish rents, and compel farmers 
to reduce in consequence the price of their produce, 
so that neither the landlord nor the farmer, but the pub- 
lic, should enjoy the benefit of the surplus produce, 
which constitutes rent.'' Surely this would reduce the 
price of provisions, and of all agricultural produce. 

Mrs B, Admitting that it did so, what advantages 
do you expect would result from the reduction of prices ? 
When a measure of compulsion, especially one so com"' 

532. How are they to be encouraged to industry ? 533. 

What would be the consequence if landed proprietors on becoming 

rich, were prohibited from letting their lands ? 534. How is 

landed property said to be acquired ? 535. What is said of the 

ratio which the rise of rents bears to the value of the whole produce I 
^ — 536. How does Caroline propose to reduce the price of pro.. 

vision for the tteijefit of the public? 537. How does Mrsi 15, 

reply to it ? 



154 REVENUE FROM LANDED PROPERTY. 

plicated, is proposed, I am always suspicious of its con- 
sequences. 

Caroline, But the good that would result is so evi- 
dent; if food were cheaper, people would be able to 
consumf^ more, and the poor would have plenty. 

Mrs B. How so ; would the land be more produc- 
tive in consequence of the abolition of rent? and if more 
should not be produced, how could the people consume 
more f An increased consumption without an increased 
supply will, as we have remarked on a former occasion, 
lead to a famine. The price of a quartern loaf is now 
one shilling ; I conclude therefore, that at that price the 
consumption of bread will be so proportioned to the quan- 
tity wanted, that the stock of wheat will last till the next 
harvest. The adoption of your compulsory measures 
might reduce the price of a quartern loaf to ninepence, 
and every poor family being thus enabled to increase 
their consumption of bread, the stock of wheat would 
not last out till the ensuing harvest. Then the following 
year, instead of raising more corn to make up the de- 
ficiency, the poorest land which yields no rent, and but 
just affords the profits of capital at the present price of 
raw produce, would, by such a diminution of price, be 
thrown out of cultivation ; and the produce of the coun- 
try would thus be considerably diminished. 

Caroline. Very true. I did not foresee that conse- 
quence. And a scarcity would perhaps raise the price 
of bread higher than it was before. 

Mrs B. How much would it be necessary for bread 
to rise in price in order to make the corn last till the 
next crops came in ? 

Caroline, To the price at which it now sells, one 
shilling. 

538. What would be the consequence of an increased consump- 
tion without an increased supply of provisions ? 539. How 

would Caroline's scheme affect the price of a loaf of bread, and 
what would be the consequence .' — ^— ?540, What would follow the 
next year I 



HE VENUE FROM LANDED PROPERTY. 155 

Mrs B, We return then to the rent-price, though no 
rent is paid,: you see, therefore, the fallacy of your mea- 
sures. The high price, of which you so bitterly com- 
plain, is the price necessary to proportion the consump- 
tion to the supply, so as to make it last till the ensuing 
harvest. 

Caroline. So far from being mortified, Mrs B. I am 
delighted with my disappointment, as it has been the 
means of convincing me that if the poor are obliged to 
pay a high price for the necessaries of life, it is for their 
own benefit, as well as that of the mighty lords of the 
land ; since it ensures them a uniform supply throughout 
the year. And 1 the more willingly acquit rent of the 
accusation of high prices, since I find that there are two 
other sources from whence that evil may spring. 

J\Irs B, I think you may add, that as these high 
prices are necessary to regulate the consumption and 
prevent scarcity, or even famine, you no longer consider 
them as an evil. An inquiry into the effects of human 
laws and institutions often discovers error; but whatever 
flows in the course of nature springs from a pure source, 
and the more accurately we examine it, the more admi- 
ration we shall feel for its author. 

Thus though rent cannot in itself be considered as an 
evil, since we have traced it to the natural fertility of 
the earth, and its diversity of soil ; yet every artificial 
measure which tends to raise the price of agricultural 
produce, so as to enable the farmer to pay a higher rent, 
is certainly injurious. Therefore restrictions on the free 
importation of corn, or any other species of raw pro- 
duce, which raises the price of those articles at home, is 
taking an additional sum out-of the pockets of the con- 

541. For what does Mrs. B. say the high price of bread is neces- 
sary ? 542. Does she think the high price of bread an evil ? 

543. To what is rent to be traced ? 544. What does Mrs B. 

«ay is certainly injurious in relation to the price of agricultural pro- 
ducts? 545. What is said of restrictions on the importation of 

corn into a country ? 



1 56 REVENUE FROM LANDED PROPERTY* 

sumer to put into that of the landlord. For rent may 
be considered as a necessary tax which the consumer 
pays to the landlord ; the farmer is merely the vehicle of 
conveyance from the one to the other. 

Caroline. And has such a measure immediately the 
effect of raising rents ? 

Mrs B. Not until the leases are expired ; during 
their existence the farmer enjoys all the adventitious 
gains or suffers all the losses that may occur, but when 
his lease is renewed it must correspond with the rate of 
profit, and rise or fall in proportion to the gains which 
the farmer expects to make, so as to give the whole of 
the surplus produce to the landlord, and leave only the 
usual profits of capital to the farmer. It may happen, 
indeed, either from ignorance or carelessness, and some- 
times from motives of humanity, that the landlord does 
not exact all that the farmer can afford to pay ; but 
these are accidental circumstances, and the whole of the 
surplus produce is considered as the fair and usual rent. 
The contract between the farmer and the landlord is 
naturally in favor of the latter, for this reason : every 
man possessed of a litde capital is capable of engaging 
in a farm, and as the land to be let is limited in extent, 
there are always more men desirous of renting farms 
than there are farms to be let. The landholders may, 
therefore, be considered as exercising a species of mono- 
poly towards farmers, being possessed of a commodity 
the demand for which exceeds the supply ; competition 
to obtain it therefore, enables the landholder to exact the 
highest rent which the farmer can afford to pay ; that is, 

546. For how long time does the farmer enjoy the adventi- 
tious gains, or suffer all the losses which occur, from such restric- 
tions ? 547. What is considered the fair and usual rent of 

lands ? 548. Why is the contract between the farmer and the 

landlord usually in favor of the latter ? 549. What monopoly do 

landholders exercise towards the farmers ? 



REVENUE FROM LANDED PROPERTY. ] 57 

to relinquish the whole of the surplus produce of agricul- 
ture to the landlord. 

Caroline, 1 do not exactly know the meaning of the 
term monopoly ; but I had always understood it to be a 
very unjust and improper thing. 

Mrs B. Monopoly is the exclusive privilege of any 
person, or set of persons, to possess or sell any particular 
commodity. When sanctioned by government it is gen- 
erally prejudicial, because it prevents the free compe- 
tition of other sellers, which would tend to the reduction 
of the price of the commodity in question. Thus if any 
set of men were exclusively privileged to deal in tea or 
coffee, there being no rival traders to enter into compe- 
tition with and -undersell them, they can raise the price 
of those articles higher than will afford the usual profits, 
and the extra profit is unfairly taken from the consumers 
of tea and sugar. Granting a monopoly is therefore a 
very improper measure of government, excepting in cases 
in which it can be proved that the restrictions imposed 
are of general benefit to the community. 

Caroline. I cannot conceive any case in which gen- 
eral good can result from giving one set of men such an 
advantage over the rest of the community. 

Mrs B. To grant a patent for a useful discovery or 
invention is authorizing a temporary monopoly, which 
is decidedly advantageous, from the encouragement it 
affords to ingenuity, investigation, and perseverance ; 
qualities which are highly beneficial to the progress of 
industry. But I wonder that you should hesitate respect- 
ing the advantages derived from the monopoly of land; 
for this monopoly simply means, that the land shall not 

550. What is to be understood by the term monopoly? 551. 

When is it chiefly detrimental ? 552. What case of monopoly is 

mentioned in illustration ? 553. In what cases may government 

with propriety grant a monopoly ? 554. What is said of patents for 

useful discoveries } 555. What is to be understood by monopoly 

in lands ? 

14 



158 REVENUE FROM CULTIVATION OF LAND. 

belong in common to all mankind, as nature designed it, 
but that it shall be exclusively possessed, sold, or disposed 
of by a particular set of men ; — in short, it is nothing 
more than the institution of property in land, the advanta- 
ges of which are so unquestionable. It is perhaps the 
only monopoly of a permanent nature which the law 
ought to sanction. If the monopoly extended to the pro- 
duce of the earth, it would then indeed partake of the 
evil effect of monopolies in general — excess of price, 
owing to deficiency of competition. 

Caroline. But can land be a monopoly, without the 
price of its produce being affected by it ? 

Mrs B. Yes : because the produce of the land 
depends not so much upon the quantity of land as upon 
the quantity of capital employed on it, and this is com- 
paratively unlimited and perfectly free from monopoly. 
Property in land, is therefore a monopoly of a very pecu- 
liar nature, confined entirely to one of the instruments of 
production ; and so far is it from raising the price of 
the fruits of the earth, that it is absolutely necessary both 
to tbeir production and to their preservation. 



CONVERSATION XIII. 

ON REVENUE DERIVED FROM THE CULTIVATION OF LAND. 

Two capitals employed on land. — Tivo revenues derived 
from it. — Of the capital and profits of the farmer. — 
Of the duration and terms of leases. Of tythes. — 
Extract from Paley. — Of proprietors farming their 
own estates. — Extract from Toumsend^s travels. — 
Farms held in administration. — Advantage of an 

556. Why would excess of price result from monopoly in the 

price of provisions? 557. Why can there be a monopoly in land 

without raising the price of its productions ? 



REVENUE FROM CULTIVATION OF LAND. 169 

opulent tenantry. — Metayer system of farming. — 
Small landed properties. — Extract from Arthur 
Young's travels. — Dairy establishments in Switzer- 
land. — Small farms. — Size of farms in Belgium and 
Tuscany. — Of min es . — Of fisheries. 

CAROLINE. 

From what you said in our last conversation I per- 
ceive that agriculture yields two distinct incomes ; one 
to the proprietor, the other to the cuhivator of the land. 

Mrs B. And it employs also two capitals to produce 
those incomes ; the one to purchase, the other to cultivate 
the land. A man who lays out money in the purchase 
of land becomes a landed proprietor, and obtains a rev- 
enue in tiie form of rent. He who lays out capital in 
the cultivation of land, becomes a farmer, and obtains a 
revenue in the form of produce. 

Caroline. What do you mean by the capital of the 
farmer, Mrs B.? I thought that the land vvustl)e capital 
from which he derived his profits. 

Mrs B. You mistake ; the land is the capital of its 
proprietor, and as such yields him a revenue ; whatever 
the farmer obtains from it, is derived from cultivation ; 
that is to say, from the labor and expense he bestows on 
the soil. The land is the machine with which he fabricates 
agricultural produce, and the income he derives from it 
is the revenue of the capital employed in working this 
machine. A farmer requires capital to pay his laborers, 
and to purchase his farming-stock, such as cattle, wag- 
ons, ploughs, &c. It is the bare land and the farming 
buildings which he rents. The crops which are upon 
the ground when the agreement is niade are paid for 
independently, and become the property of the farmer. 

558. What division is there in the income from agriculture ? 

559. What division is there in the capital employed in agriculture ^ 

560. For what does the farmer need capital.' 



160 REVENUE FROM CULTIVATION OF LAND. 

Unless therefore he has a capital to defray these ex- 
penses, he cannot take the lease of a farm. 

Caroline. I always supposed that the produce of a 
farm was sufficient to defray its expenses 3 nor can I 
understand how profits are to be derived from a farm, 
if the cultivation and rent cost more than its produce 
will repay. 

Mrs B. It is not so. The capital of the farmer is 
employed as the means of cultivating his farm : and when 
at the end of the year, after paying his rent, his labor- 
ers, and keeping, his stock in j-epair, he finds himself in 
possession not only of his original capital, but also of a 
surplus or profit; it is a proof that the farm produces 
more than the cost of its rent and cultivation. The case 
is similar in all employment of capital. The manufac- 
turer who lays it out in the purchase of raw materials, 
and in paying the labor which is afterwards expended 
on them ; or the merchant whose capital is employed in 
the purchase of goods for sale, could not carry on their 
respective occupations without first laying out their cap- 
ital : but it is returned to them, together with the profits 
that have accrued by its employment. Each of these 
occupations brings in more than is laid out, but none of 
them could be carried on without a capital. 

Caroline. Oh yes ; I recollect the laborer produces 
for his employer more than he receives from him as 
wages, and this surplus is the source of his master's profit ; 
but if the farmer had not wherewithal to pay his laborers' 
wages, he could norsetthem to work. 

It is then upon the capital which the farmer employs 
on his land, that he calculates his profits ^ 

Mrs B. Yes. Let us suppose that a farmer employs 

561. Why must a farmer have capital when he takes the lease of 

a farm ? 562. What is found to be the condition of the farmer 

at the end of the year? 563. Why is capital needed by the manu- 
facturer? 564. Why is it needed by the merchant ? 565. Upon 

what does the farmer calculate to receive his profits ? 



REVENUE FROM CULTIVATION OF LAND. 161 

a capital of the value of 3000/. on his farm ; he may, 
possibly, after deducting the rent and the expenses of 
cultivation, make ten per cent, or 300/. profit. 

Caroline. That is to say, that at the end of the year 
he would find himself 300/. richer than he was before.^ 

Mrs B. Provided he had spent none of his gains 
during the course of the year. But as his family are 
commonly maintained by the produce of the farm, he 
will at the end of the year be actually richer or poorer 
according to the proportion which his domestic expenses 
have borne to his gains. But these cannot be con- 
sidered as a deduction from his profits, as the expense 
of the maintenance of his family must fall upon his reve- 
nue in whatever way it is obtained. 

Caroline. And what is the usual rent paid for such a 
farm ? 

Mrs B. It depends in a great measure upon the 
extent and condition of the land. A considerable farm, 
in a good state of cultivation, and possessing the advan- 
tage of a fertile soil, may not require a capital of more 
than 3000/. to carry it on ; whilst a farm of only half that 
extent, if in a bad condition, and with an ungrateful soil, 
may require as large a capital to be laid out on it. But 
a very different rent would be paid for these two farms. 

Caroline. Of course the large productive farm must 
pay a higher rent than the smaller ill-conditioned one ? 

Mrs B. And a difference of rent will equalize the 
profits which a farmer would derive from employing the 
same quantity of capital on each of these farms. Tak- 
ing an average of the state of culture, a farm which 

566. What case is mentioned in illustration of this ? 567. 

Will then the farmer supposed with his 300Z. of annual profit be 
that sum richer at the end of the year than he was at the beginning 

of it ? 568. On what does the amount of capital depend needed in 

the cultivation of a farm ? 569. What is stated to be the average 

rent of farms ? 



14 



* 



162 REVENUE FROM CULTIVATION OF LAND. 

requires 4000Z. capital may pay a rent of about 200/. 
the sliare of the farmer being nearly half as much again 
as that of the landlord, 

Caroline, You said in our last conversation, that 
the rent of land had lately been estimated as low as one 
fifth of the produce. A farm, such as you have de- 
scribed, would therefore yield produce worth 1000/., in 
which case the profits of the farmer would be above three 
times as great as those of the landlord. 

Mrs B. You forget that from the total produce 
must be deducted not only the rent, but also the expen- 
ses of cultivation ; these are generally estimated at one 
half of the produce, after deducting the rent ; there will 
remain therefore 400/. which is 10 per cent profit on 
the 4000/. capital employed on the farm. If from this 
sum the farmer saves 50/. he may lay it out in the im- 
provement of his land, which will render the produce 
more plentiful the following year ; an advantage of which 
be will derive the full benefit, as his rent will remain the 
same to the end of the lease. 

Caroline. But on granting a new lease, the propri- 
etor, I suppose would expect a higher rent for a farm 
that had been thus improved ? 

Mrs B. No doubt I it is therefore desirable that 
land should not be let on short leases, because farmers 
would have no inducement to improve the condition of 
their land without the prospect of reaping the benefit of 
it for some years to come. 

Caroline. But towards the end of the lease, this 
objection would remain in force .^ 



570. Under what mistake is Caroline as to the profits of the far- 
mer compared with the profits of the landlord? 571, What is 

computed to be the average expense of the cultivation of farms ? — 572. 
How may a farmer advantageously expend what of his profits 

remain after paying for the support of his family ? 573. On what 

account is it desirable that farms be rented on long leases ? 



REVENUE FROM CULTIVATION OE LAND. 163 

Mi's B. True ; but to prevent this farmers generally 
obtain "a renewal of their leases sometime before they 
are elasped. Besides it would be contrary to the inter- 
est of the landlord to deal hardly with his tenants on 
such occasions, as it would discourage them from im- 
proving their farms ; an advantage in which the landlord 
must eventually partake. 

In Staffordshire, Nottinghamshire, and some other 
parts of the country, it is not customary to grant leases; 
the tenants hold their farms at the will of the landlord. 
There is, however, a sort of conventional agreement 
between the parties, that except in cases of misconduct, 
the farmer shall not be removed, nor have his rent raised 
daring a certain period. Some people are of opinion 
that this mode of letting land is preferable to granting a 
lease ; because they say the industry of the farmer is 
stimulated both by hope and fear; the hope of profit from 
his labors, and the fear of being turned out should he neg- 
lect the improvement of his farm : but in arguing thus 
they do not consider that this fear must operate in two 
ways, for in proportion to the improvement which the 
farmer makes, so is the temptation to the landlord, 
if he be needy or illiberal, to turn him out, or to exact 
an increase of rent. In short, there can be no greater 
check to industry than the insecurity of the profits it pro- 
duces ; and how can a farmer feel his interest secure 
whilst he is dependent on the will of his landlord ? 

Caroline. Besides, though a farmer may repose 
great confidence in the character of the individual whose 
land he holds, the uncertainty of life renders him depend- 
ent also upon his heir, and this may perhaps be some 

574. Caroline supposes that if the farmer spends his surplus 
income upon the farm, when the lease expires, the landlord will 

raise the rent — how is this to be guarded against? 575. In what 

places is it customary not to grant leases ? 576. How do 

tenants there hold their farms ? 577. What are the advantages, 

and what are the disadvantages of this mode of letting farms ? 

578. What is the greatest check to industry ? 579. What fur- 
ther objection does Caroline offer to this mode of letting farms? 



164 REVENUE FROM CULTIVATION OF LAND. 

wild extravagant youth, who without regard to his ulti- 
mate interest, will exact the highest rents from his ten- 
ants. 

Mrs B. Security is, no doubt, the most important 
point for the encouragement of industry; and the great- 
est, indeed the only encouragement which government 
can give to agriculture, is to secure to the farmer all the 
power over the soil that is necessary for its perfect cultiva- 
tion, and to ensure him the profits of every improvement 
he may make. I will read you a passage from Paley on 
this subject. 

" The principal expedient by which laws can promote 
the encouragem.ent of agriculture, is to adjust the laws 
of property as nearly as possible by the following rules ; 
1st, To give to the occupier all the power over the soil 
which is necessary for its perfect cultivation. 2dly, To 
assign the whole profit of every improvement to the per- 
sons by wiiom it is carried on. Now it is indifferent to 
the public in whose hand this power of the land resides, 
if it be rightly used; it matters not to whom the land 
belongs if it be well cultivated. 

"Agriculture is discoui'aged by every constitution of 
landed property which lets in those who have no con- 
cern in the improvement to a participation of the profit. 
This objection is applicable to all such customs of manors 
as subject the proprietor, upon the death of the lord or 
tenant, or the alienation of the estate, to a fine apportion- 
ed to tlie improved value of the land. But of all institu- 
tions which are in this way adverse to cultivation and 
improvement, none is so noxious as that of tythes. 
When years [)erhaps of care and toil have matured an 
improvement, wb.en the husbandman sees his new crops 
ripening to his industry, the moment he is ready to put 

580. What is the greatest encouragement government can give 
to agricuhure ? 581. What rules does Paley give on this sub- 
ject ? 582. What does he say is the only thing ')f importance in 

agriculture ? 5S3. By what"^ constitutions is agriculture dis- 
couraged ? 584. What does he say of tythes ? 



REVENUE FROM CULTIVATION OF LAND. 165 

his sickle to the grain, he finds himself compelled to 
divide his harvest with a stranger. Tythes are a tax not 
only upon industry, which feeds mankind, but upon that 
species of exertion which it is the aim of all wise laws 
to cherish and promote." 

Caroline. It is indeed much to be regretted that a 
provision for the clergy should not be raised in some other 
manner- 

Mrs B. Since all right of property, is derived from 
legal institutions, the clergy have an equal right to their 
tythes as the landed proprietors to their estates; yet so 
severely does this law fall upon the cultivators of land, 
that 1 believe few of the clergy venture to levy tythes to 
the extent of their right ; they cannot do it without incur- 
ring the ill will and opposition of their parishioners. 
Hovs^ defective then must that institution be, which dis- 
possesses one man of the fruits of his industry, whilst it 
will not allow another to take, without exciting vexation 
and disturbance, that which the law has assigned him 
as his property. 

Tythes are a portion of the surplus produce of agri- 
culture, destined for the maintenance of the clergy. 
They should be considered, therefore, as a portion of 
rent, for if the farmer did not pay tythes to the rector of 
his parish, his rent would be raised proportionally ; and 
indeed lands tythe free always yield a higher rent. 

Would it not be better then, that tythes should be 
paid by the farmer to his landlord in the form of rent, 
and that they should be through him transmitted to the 
clergyman ; the tythes would then bear a proportion to 
the rent, and not the annual produce of the land f By 

585. What is said of the right of the English clergy to their tythes ? 

586. Why do they not levy them to the extent of their rights ? 

587. What is mentioned as a defect of such a government ? 

588. What are tythes ? 589. Andhow^ may they be consi- 
dered as to rent ?- 590. What better mode of paying the clergy 

than the one now existing is mentioned ? 



166 REVENUE FBOM CULTIVATION OF LAND. 

such a regulation the clergy would know on what income 
to depend, and the farmer would not have the vexation 
of seeing any part of the fruits of his labor gathered by 
another. It would destroy that source of ill will and 
contention between the clergy and their parishioners, and 
that opposition of interests which are so prejudicial both 
to religion and morals; and it would remove that con- 
stant check on industry, which is so severely felt in the 
present mode of levying tythes. 

Caroline. Such an alteration would certainly be ad- 
vantageous to all parties. 

Since it is so desirable for the cultivator to have unlim- 
ited power over the soil, I should have thought that it 
would have been particularly advantageous for landed 
proprietors to cultivate their own estates, instead of 
letting them to farmers ; and yet it is a common observ- 
ation that gentlemen make the least profits by agriculture. 
This is the more unaccountable, because, being both 
landlord and farmer, the proprietor must receive the two 
incomes comprised in the produce of the land, rent and 
profit. 

, Mrs B. But recollect that he also employs two cap- 
itals, in order to make the two incomes ; the one to pur- 
chase the land, the other to cultivate it. The reason 
why gentlemen who cultivate their own estates do not 
usually make profits equal to those of a common farmer, 
is either because they do not understand the business so 
well, or that they do not bestow the same care and atten- 
tion upon it. The common farmer usually devotes the 
whole of his time to his farm, either in the capacity of 
bailiff, or that of laborer; while the gendeman farmer 
never earns the wages of a laborer, and generally leaves 

591. What woulAbethe advantage of such an alteration ? 592. 

V/hat is said of the profits of the landlord who cultivates his own 
farm? 593. Why does he not make equal profits with the farmer ? 



REVENUE FROM CULTIVATION OF LAND. 167 

the important office of bailiff to be performed by a sub- 
stitute ; therefore were the gentleman to raise as plentiful 
crops as the farmer, they would be produced at a more 
considerable expense, and his gains would be proportion- 
ally diminished. •As to the value of the rent, it must be 
reckoned independently, as he receives it in his quality 
oflandlord. 

Caroline' It would then probably increase the agri- 
cultural produce of the country, if gentlemen were always 
to let their land instead of farming it themselves. 

Mrs B, On the contrary, I believe it to be very 
desirable that some few gentlemen, in different parts of 
the country, should cuhivate their own estates. Being 
generally men of greater information than common far- 
mers, they are more willing to make experiments, and 
adopt any new mode in the various agricultural processes 
which may appear eligible. Besides the land is frequent- 
ly better improved in the hands of the proprietor than 
in those of a laboring farmer; as the proprietor has usually 
the advantage of a larger capital to lay out on his land, 
and then he is DOt restrained by the apprehension that 
his rent will be ultimately raised in proportion to the 
additional value which he gives to the land. 

Townsend, in his travels in Spain, has made some 
very judicious observations on English gentlemen far- 
mers. 

" By residing," he says, " on their own estates, they 
not only spend money among their tenants which by its 
circulation sets every thing in motion, and becomes pro- 
ductive of xiew wealth, but their amusement is to make 
improvements. By planting, draining, and breaking up 

594. Is it not chiefly because they do not labor themselves ? 
595. What does Caroline think would increase agricultural pro- 
duce ? 596. What does Mrs B. consider would be better than 

to have lands entirely rented? 597. What reason is given by 

Mrs B. why it would be better for a few gentlemen in different parts 
of the country to cultivate their own farms ? 598. What travel- 
ler is quoted on this subject? 



168 REVENUE FROM CULTIVATION OF LAND. 

lands v^^hich would have remained unprofitable, they try 
new experiments, vi^hich their tenants could not afford, 
and which, if successful, are soon adopted by their 
neighbors. They introduce the best breed of catde, 
the best implements of husbandry, and#the best mode of 
agriculture ; they excite emulation, they promote the 
mending of the roads, and secure good police in the vil- 
lages around them. Being present, they prevent their 
tenants from being plundered by their stewards. They 
encourage those who are sober, diligent, and skilful; 
and they get rid of those who would impoverish their 
estate. Their farmers, too, finding a ready market for 
the produce of the soil, become rich, increase their stock, 
and by their growing wealth make the land more produc- 
tive than it was before." 

Caroline. You have enumerated so many advanta- 
ges on the opposite side of the question, that I begin to 
think that it would be more beneficial to the country that 
all landed proprietors should cultivate their own estates ; 
for though they might not be great gainers by it them- 
selves, yet the country would derive all the advantages 
from the improvements of the soil, and the introduction 
of scientific agriculture. 

Mrs B. A few gentleman farmers in each country 
will be sufiScient for the latter purpose. Were it com- 
mon for proprietors to farm their own estates, I am con- 
vinced that is would be extremely injurious to agricultural 
produce; for no command of capital, no scientific know- 
ledge, can, in a general point of view, compensate for the 
keen and vigilant eye of the industrious farmer, who 
sees that everything is turned to the best account. 

Caroline. J should suggest as a medium between 



599. What are his remarks ? 600, What reply does Caroline 

make to the remarks of Townsend ? 601. What would be the 

consequence if it were common for proprietors to farm their own es- 
tates ? 602. Why would it be hurtful ? 



REVENUE FROM CULTIVATION OF LAND. 169 

these two modes, that a landed proprietor should nei- 
ther farm bis estate, nor let it, but employ an agent to 
cultivate it for him, whose salary should be proportioned 
to the produce which he raises on the land. 

Mrs B, Such 1 believe was the species of tenure by 
which farms were held by the vassals of the nobles when 
they were first emancipated from slavery, and that mili- 
tary services were no longer, as in feudal times, consi- 
dered as a sufficient remuneration for the occupancy of 
land. To give the cultivator any interest in the pro- 
duce he raises acts certainly as a spur to his industry; 
but it is one much less powerful than the security and in- 
dependence of the leasehold fai-mer, who after paying a 
stipulated rent enjoys the whole advantage of the efforts 
of his industry. 

Townsend informs us, that most of the great estates 
in Spain are held in administration, that is cultivated by 
agents or stewards for the account of the proprietor; and 
it is principally to this cause that he attributes the low 
state of agriculture. *' No country," he observes, " can 
suffer more than Spain for want of a rich tenantry, and 
perhaps none in this respect can rival England. We 
find universally that wealth produces wealth, but then to 
produce it from the earth, a due proportion of it must 
be in the pocket of the farmer. Many gentlemen among 
us, either for amusement, or whh a view to gain, have 
given attention to agriculture, and have occupied much 
land : they have produced luxuriant crops, and have in- 
troduced good husbandry; but I apprehend few can 
boast of having made much profit ; and most are ready 
to confess that they have suffered some loss. If, then, 
residing on their own estates, with all their attention they 

603. — What medium does Caroline put between Ihe two methods 

named for cultivating land ? 604. When and by whom did such 

a practice exist ? 605. What does Mrs B. think of this prac- 
tice ? 606. How are great estates held in Spain ? 607. How 

does Townsend say that Spain has suffered ? 

15 



170 REVENUE FROM CULTIVATION OF LAND. 

are losers, how great would be the loss if in distant pro- 
vinces they employed only stewards to plough, to sow, 
to sell, and to eat up the produce of their lands." 

There are, however, in warmer climates, some spe- 
cies of produce, which from their peculiar nature far- 
mers would not venture to undertake to cultivate on their 
own account, and proprietors would be unwilling to trust 
entirely to their management. Such is the culture of 
the vine and the olive, plants which require the utmost 
care and attention during a number of years before they 
begin to yield any fruit, and farmers are seldom suffi- 
ciently opulent to engage in a species of husbandry, the 
profits of which are so long protracted. On the other 
hand, as those plants may be very materially injured by 
being allowed to bear fruit either prematurely or too lux- 
uriantly 5 and as the interest of the farmer looks rather 
to immediate than remote profits, it is not considered' 
safe to 'trust such plantations entirely to his care. Vine- 
yards and olive-grounds are therefore, I am informed, 
cultivated by the farmer in half account with the propri- 
etor, who shares with him equally the expenses and the 
profits. This is called the Metayer system of cultivation 5 
it was formerly very common on the continent for all 
kinds of produce, and still prevails in Italy, where the 
land is so extremely subdivided, that the metayer far- 
mers, frequently subsisting upon half the produce of not 
more than three or four acres of land, are scarcely supe- 
rior in condition to our peasantry. In France and 
Switzerland this system of farming is confined almost ex- 
clusively to the culture of the vine and the olive. But how 
requisite soever the system may be for particular plan- 
tations, the usual mode in this country of granting leases, 

608. Why could not common farmers cultivate the vine and the 

olive, on their own account? 609. Why might not the farmer 

be trusted with the entire culture of them ? 610. How then are 

they cultivated ? 611. What is this system called? 612. What 

is said oi this system in France and Switzerland ? 



re: VENUE FROM CULTIVATION OF LAND. 171 

I conceive to be, not only most advantageous to the far- 
mer, but ultimately so to the landed proprietor, who can 
procure the highest rent for the land best cultivated ; and 
it is also most beneficial to the country by yielding the 
greatest produce. But in Spain this mode could not be 
adopted for want of an affluent tenantry. The weahh of 
the country is chiefly engrossed by the nobles and cler- 
gy ; there is a total deficiency of yeomen, or- farmers 
who cultivate their own land ; and the middling classes 
are few in number, and so destitute of capital, that they 
are incapable of taking a lease of land. 

Caroline. I often wish that the property of land was 
more subdivided in this country. How delightful it would 
be to see every cottage surrounded by a few acres be- 
longing to the cottager, which would enable him to keep 
a cow^, a {qw pigs, and partly at least to support his fa- 
mily on the produce of his litde farm. Do you recollect 
Goldsmith's lines ? 

"A time there was, ere England's grief began. 
When every rood of ground maintain'd its man : 

But now alas! 

Along the lawn where scatter'd hamlets rose, 
Unwieldy wealth and cumbrous pomp repose, 
And every want to luxury allied." 

Mrs B. I shall point out to you a passage in Arthur 
Young's Travels in France, in which this question ap- 
pears to be ably discussed. 

Caroline reads. " 1 saw nothing respectable in small 
properties except most unremitting industry. Indeed it 
is necessary to impress on the reader's mind that 
though the husbandry I met with in a great variety of 
instances was as bad as can well be conceived, yet the 
industry of the possessors was so conspicuous and meri- 

613. Why could not the same system of cultivation be practised 

in Spain that exists in England ? 614. What does Caroline say 

she would like to siee ? 615. To what author does Mrs B. refer 

Caroline for instruction on this particular ? 616. What did 

Young say that he saw which was respectable .-' 



172 REVENUE FROM CULTIVATION OF LAND. 

torioLTS that no commendations would be too great for 
it. It was sufficient to prove that property in land is the 
most active instigator to severe and incessant labor. 
And this truth is of such force and extent that I know 
no way so snre of carrying tillage to a mountain top 
as by permitting the adjoining villagers to acquire it in 
property; in fact we see tliat in the mountains in Lan- 
guedoc they have conveyed earth in baskets on their 
backs to form a soil where nature has denied it." 

Mrs B. Land that is loo poor to afford a rent may 
still yield sufficiently to pay the proprietor for its culti- 
vation ; it is therefore the properly of such soils alone 
which will ensure their being culiivated. — But go on. 

Caroline reads. " But great inconveniency arises in 
small properties from tlie universal division which lakes 
place after the death of the proprietor. Thus I have seen 
some farms wliich originally consisted of forty or fifty 
acres reduced to half an acre, w'th a family as much 
attached to it as if it were an hundred acres. The 
population flowing from this extreme division is often 
but tliC multiplication of wretchedness. Men increase be- 
yond the demand of towns and manufactures, and the 
consequence is distress and numbers dying of diseases 
arising from insufficient nourishment. Hence small pro- 
perties much divided form the greatest source of misery 
that can be conceived. 

'' In England small properties are exceedingly rare ; 
our laborin.g poor are justly emulous of being the proprie- 
ters of their cottages, and that scrap of land which 
forms the garden ; but they seldom think of buying land 
enough to employ themselves. A man that has two or 

617. What did he say would be the effects of property in land ? 
— — 61S. What is mentioned concerning the mountains of Langue- 

doc ? 619. How much does he say'he has seen farms divided ? 

620. What account does he give of the miseries he has seen 

from such divisions of land ? 62X. What are the poor in Englan<J 

emulous to do ? 



REVENUE FROM CULTIVATION OF LAND. 173 

three hundred pounds with us, does not buy a field but 
stocks a farm. In every part of England in which I 
have been, there is no comparison between the case of 
a day laborer and of a very little farmer : we have no 
people that fare so hard and work so ill as the latter. 
No labor is so wretchedly performed and so dear as 
that of hired hands accustomed to work for themselves ; 
there is a disgust and listlessness that cannot escape an 
intelligent observer, and nothing- but real distress will 
drive such little proprietors to work at all for others. 
Can any thing be apparently so absurd as a strong, 
-hearty man, walking some miles and losing a day's 
work in order to sell a dozen of eggs or a chicken, the 
value of which would not be equal to the labor of con- 
veying it, were the people usefully employed?" 

Caroline. This reminds me of a poor woman in 
Savoy, who kept a {ew cows among the mountains two 
or three leagues distant from Geneva. Having no other 
market for her milk, she carried it regularly every day 
to that town for sale ; thus the greater part of her time 
was spent upon the road, whilst it might certainly have 
been much more profitably employed had she been 
dairy maid to some considerable farmer, who having 
milk enough to turn it to butter and cheese, could in that 
state send it wholesale to market. 

Mrs B. The inconvenience you allude to has of 
late years been obviated in many of the villages of 
Switzerland, especially in the neighborhood of Geneva, 
by the introduction of a peculiar species of public dairy 
establishments, which, I understand, originated in the 
plains of Lombardy. To these dairies, called Fruiiie- 

622. How does a farmer in England who has two or three hun- 
dred pounds ? 623. What does he mention as very absurd ? 

624. What case does Caroline mention of a poor woman in 

Savoy? 625. How has this inconvenience been obviated in 

Switzerland ^ 626. What is the custom, and where did it origi- 
nate ? 

15* 



174 REVENUE FROM CULTIVATION OF LAND. 

res, the farmers in the vicinity bring their daily stock of 
milk, which is converted into buller and cheese and re- 
turned to them in that form, the establishment retaining 
only such a portion as is necessary tD defray its ex- 
penses. 

There are also considerable dairy establishments in 
the Swiss m.ountains, but these are commonly private 
property j the proprietor of the mountain pasture usually 
hiring cows of the neighboring farmers, who ai'e com- 
monly repaid in the manufactured produce of the 
dairy. 

Small landed properties are extremely common in 
Switzerland. The canton De Vaud consists chiefly of 
such, and they do not seem to be attended with the mis- 
chievous consequences which Arthur Young describes ; 
for the country is well cultivated, and landed property 
is not reduced to that minute division which entails 
wretchedness. 

Caroline. I heard a gentleman who is lately return- 
ed from France say, that three servants, whom he had 
hired at Marseilles, had all been men of landed proper- 
ty ; but that the portion of inheritance to each had 
been so small, that they had disposed of it to other 
members of their families^ in order to hire themselves 
as servants. 

Mrs JB. When this or any other cause prevents the 
extreme partition of landed property, the principal 
objections to small properties are removed ; and the 
disadvantage arising from deficiency of capital, may be 
in a great measure compensated by the stimulus given 
to the industry of a man who cultivates his own land. 

This system is perhaps best calculated for mountain- 
ous countries, where the strongest motives to industry 

627. What is said of the dairies in the Swiss mountains ? 628. 

What is said of the canton De Vaud ? 629. What is the account of 

three servants from Marseilles ? 630. How may the deficiency 

of capital for agriculture be compensated ? 631, For what 

description of countries are small landed estates best suited ? 



REVENUE FROM CULTIVATION OF LAND. 175 

fire required, to induce men to climb the steep rock in 
order to cultivate a small patch of earth favorably situa- 
ted on its acclivity. 

Caroline. I have heard the condition of the lower 
agricultural classes in France has been very much im- 
proved by the sale of the national domains, at the com- 
mencement of the revolution in that country ; that it has 
enabled the small farmers and many of the peasantry to 
become landed proprietors, and thus to cultivate their 
own land ; and that this subdivision of property has 
proved so beneficial that, notwithstanding all the 
evils they have since had to contend with, they are yet 
in a very thriving condition. This does not seem to 
agree with Arthur Young's statements ? 

Mrs B. By the sale of the national domains, very 
small proprietors, whose land was scarcely equal to the 
maintenance of their families, were enabled to enlarge 
their farms. The ill consequences arising from an ex- 
treme subdivision of land would thus be remedied. 
But we must recollect that at the commencement of the 
French revolution, the restrictive and oppressive laws 
which checked the progress of every branch of industry, 
were abolislied ; this gave vigor to agricultural pursuits. 
Then the sale of confiscated lands, at a period when its 
tenure was considered as extremely insecure, rendered 
them so cheap, that it was almost as easy to purchase 
an estate in France as in America, with the additional 
advantage of its being already in a state of cultivation. 

These circumstances all concurred to improve the 
condition of tlie small landed proprietors. With a view 
of amassins; little capitals to lay out upon their new do- 

632. What account does Caroline give of the lower agricultural 

classes in France? 633. What does Mrs B. say of the very small 

proprietors of land in France, at the time of the revolution? 

634. W^hat effect had the removal of the restrictive system ? 

635. Why vi^ere lands at that time so cheap in France ? 636. 

What is said of the small capitals now growing up there ? 



176 REVENUE FROM CULTIVATION OF LAND. 

mains, they have acquired habits of industry and econo- 
my, and such habits are of themselves a treasure to a 
country. These small capitals which are now growing 
up in France, will no doubt prove a source of prosperi- 
ty ; but as the French law divides the landed property 
of a man dying w^ilhout a will among all his children 
equally, it may probably in time lead to that extreme 
division of landed property which is attended with such 
injurious effects. 

Caroline. And are there the same objections to 
small leasehold farms as to small landed properties? 

JSlrs B. In a great measure. It is poverty alone 
which induces a man to take a very small farm ; and a 
poor farmer cannot make those exertions which are re- 
quisite for good husbandry. The profits of a considera- 
ble farmer enable him to improve his land ; those of a 
small one are entirely consumed in the maintenance of 
his family ; his land is therefore badly cultivated, and he 
has little or no surplus produce to send to market. 

I met with a remarkable instance of the disadvantage 
of extremely small farms during a visit to a considerable 
landed proprietor in Hampshire. He made me observe 
a field in which a number of laborers were employed 
ploughing and sowing turnips, and pointed out a man 
whose appearance was far less creditable than that of 
the other laborers. "That man," said he^ " rents this 
single field, and resides in the wretched cottage you see 
at the end of it : the common laborers are better fed 
and clothed than himself, because he cannot earn so 
good a livelib,ood by his farm as they can by their daily 
work. Unable to afford the expense of hiring a team 

637. How do£S the law in France divide the landed propertj^ of a 

man that dies without a will ? 638. What induces a man to take 

a small farm ? 639. What comparison is made between a large 

and a small farmer? 640. What account is given of a small 

farmer in Hampshire ? 



REVENUE FROM CULTIVATION OF LAND. 177 

of horses to plough his field, and not knowing where to 
procure sheep to eat off the turnips which should be the 
crop next in rotation, his intention was to have let the 
field lie fallow ; when I proposed to him to undertake 
to plough and sow it, on condition that my sheep should 
eat off the turnips on the groimd, by which means they 
would manure it, and Wis field would be returned to him 
in a much better state than if suffered to be Jallow. To 
this proposal he assented, and thus we shall both be 
gainers." 

Cnroline. And the country will profit by both their 
gains, for the sheep will be fattened by turnips, which, 
without such an agieenjent, would not have been grown ; 
and the farmer's ensuing crop will be more productive 
from the land having been manured by the sheep. 

But wliat sized farms do you suppose to be most 
beneficial to a country ? 

Mrs B That, must vary extremely, according to 
the local situation, the nature of the climate and soil, 
and the capital of the farmer. In Belgium, which is 
esteemed one of the best cultivated countries in Europe, 
I am informed that the farms are upon an average about 
forty acres 5 and in Tuscany, another spot remarkable 
for the excellence of its agriculture, the farms seldom 
exceed ten or fifteen acres ; all cultivated upon the 
metayer system ; out in tliis favored climate the fields 
yield such abundant crops that the produce approaches 
more nearly to that of a Belgic farm, tlian you would 
imagine h'om the difference of their extent. 

In this country there is, I think, a strong predilection 
in favor of considerable farms. Were I to give an 
opinion, I should say that a farm should never be so 

641. What question does Caroline ask as to the size of farms ? 

642. Wtrat is the size of farms in Belgium ? 643. An(J of 

yvhat size in Tuscany ? 644. What size does Mrs B. think faunas 

fhould be ? 



17S REVENUE FROM CULTIVATION OF LAND. 

large that the farmer cannot superintend the whole of 
the cuhivation himself: nor so small as not to enable 
him to keep up that farming, stock establishment neces- 
sary for the most perfect husbandry. But this is a 
point which may be safely left to regulate itself. I do 
not apprehend that this country can suffer by the differ- 
ent size of farms ; for there are very few small landed 
properties ; and as it is the interest of the landlord to 
draw the gieatest possible income from his estate, he 
will let his Ibarras of such dimensions as he conceives his 
tenant will be able to turn to the best account. To a 
very opulent farmer he may be induced to grant a lease 
of a large farm ; whilst he will refuse that of a single 
field to a cottager who v/ould exhaust instead of improv- 
ing the soil. 

The advantages of considerable farms have been so 
ably delineated in one of the last numbers of the Edin- 
burgh Review, that J shall read you the passrge : 

"It is quite evident that some of the most valuable 
mechanical inventions could never have come into gen- 
eral use if there had been no farms of more than 100 or 
150 acres; that no great improvement could have been 
made in bur live stock : that there would have been 
still less room than there is at present for the division of 
labor, and for its accumulation for the purpose of des- 
patch at particular seasons ; that there would not have 
been that systematic arrangement by which every differ- 
ent quality of soil is made to produce those crops and to 
feed those sorts of animals for which it is best calcu- 
lated ; that it would have been almost impracticable to 
practise convertible husbandry at all, which by combin- 

645. By what would a landlord in England be governed in letting 
his farms ? 646. What does the Edinburgh Review say of me- 
chanical inventions had there been no farms of more than 100 or 150 

acres ? 647. What other advantages have resulted from large 

farms ? 



REVENUE FROM CULTIVATION OF LAND. 179 

ing tillage and pasturage on the same farm, contributes 
so powerfully to sustain and augment the fertility of the 
soil ; that the surplus produce for the supply of towns 
would Iiave been inconsiderable at all times, and from 
the general poverty of small tenants brought to market 
in too great abundance in the early part of the season, 
instead of apportioning it over the whole year ; and in 
bad seasons there would have been no surplus at all : — 
and that in short, as no person of capital or enterprise 
would even have entered into the profession, our extensive 
moors and morasses, and indeed all our inferior soils, 
must have remained in their natural state, or been par- 
tially and most unprofitably improved under the dele- 
gated management of great proprietors." 

It is now, I think, high time to conclude the subject 
of agriculture ; and it is necessary to say only a few 
words on Mining, a branch of industry wliich I have 
placed next to agriculture, on account of its analogy to 
it, in affording a rent. 

Mines, like land, generally yield a rent to the proprie- 
tor as well as profits to the undertaker, whose capital is 
employed in working them. The coal mines, notwith- 
standing the great assistance derived from machinery, 
give work to several hundred thousand laborers who 
earn their maintenance, besides the profits of their em- 
ployer, and the rent of the proprietor ; and this rent is 
in general more considerable than that of agricuhural 
land, as the produce of coal mines is more valuable than 
that of the soil. 

Caroline. _ The mines that contain metals are, I sup- 
pose, of still greater value ? 



648. Why is mining placed next in order to agriculture ? 649. 

How many persons are employed in the coal mines of England ? 

650. Why is rent from mining more than agricultural land? 

651. What is said of the value and the rent of mines that con- 
tain metals •' 



180 REVENUE FROM CULTIVATION OF LAND. 

Jlirs B. Yes, and their rent proportionally higher ; 
but the profits of the capitalists who rent them, and of 
the laborers who work Jhem, is not greater. As the 
value of a mine, however, depends upon the quantity, as 
well as on the quality of the metal it affords, it frequently 
happens that a lead mine wiil fetch a higher rent than a 
silver mine. The expense oi" working coal mines is less 
than that of metallic mines. The coal requires nothing 
more than to be extracted from the earth : but with the 
metals the labor is much more complicated ; they must 
be separated from the ore in the furnace, and undergo a 
variety of processes before they are fit for the purposes 
of art. 

The risk and uncertainty attending raining is greater 
than that of any other employment of capital ; and ac- 
cordingly we find both larger fortunes made, and more 
people ruined in that than in any other branch of in- 
dustry. 

Caroline. The chance of gain then compensates for 
the risk of loss ; but upon the whole I suppose the pro- 
fits are similar to those derived from other modes of em- 
ploying capital ? 

Mrs B. I am inclined to believe the profits of min- 
ing to be rather lower than the common standard. In 
all hazardous enterprises men are prone to trust to their 
good fortune, and generally consider the chances more 
in their favor than an accurate calculation would warrant. 
This is evinced by the readiness with which men venture 
to stake their money in the lottery; though it is well 
known that the chances of gain are decidedly against 
them. A mine is a more advantageous lottery no doubt 

652. What is said of the profits of them ? 653. Why is a lead 

mine sometiines more valuable than a silver one ? 654. What is 

said of the rii-k and uncertainty of mining ? 655 How do the 

profits of mii-ing compare with other modes of employing capital? 
656. W hy then are persons disposed thus to invest capital ? 



REVENUE FROM CULTIVATION OF LAND. 181 

than that of government, but it contains a prodigious 
number of blanks, and only a few great prizes. San- 
guine hopes and expectations in some measure supply 
the place of actual gains ; yet if the average profits of 
raining should at any time fall so low as to discourage 
the spirit of enterprise, and diminish the requisite supply 
of metals, their price would rise until it had brought back 
a sufficient capital to that branch of industry. 

I have mentioned fisheries as a source of employment 
for capital, and a means of affording a revenue. Very 
large capitals are engaged in the whale, the cod, and the 
herring fisheries, besides those smaller ones which sup- 
ply the country with fresh fish. But as the sea in which 
these fisheries are carried on, is not susceptible of be- 
coming private property, they yield no rent. There are 
however some considerable inland river fisheries which 
belong to individuals, and bring in a rent. No fewer 
than fortyone different salmon fisheries upon the river 
Tweed are rented for several thousands a year ; and I 
am informed that the duke of Gordon lets a salmon fish- 
ery on the Spey for 7000/. a year. In the Scotch fish- 
eries it is very common to take four or five score of sal- 
mon at a drauo:ht. In England there are also consider- 



able salmon fisheries in the Tyne, the Trent, the Severn, 
and the Thames. 

We have already noticed the manner in which a re- 
venue is obtained from manufactures ; what further ob- 
servations we have to make on this branch of industry 
we shall defer till we enter on the subject of trade, u'ith 
which it is so naturally connected. 

657. What would be the consequence, if the spirit of enterprise 

should be discouragjed, by the low avera2;e profits of mining ? 

658. What other source of employment for capital is mentioned? 
659. In what description of fisheries are lar^e capitals em- 
ployed ? 660. What fisheries yield a rent .' 661. For what 

sum does the salmon fishery on the Spey rent? 662. What is 

said of the Scotch fisheries ? 

36 



182 REVENUE FROM CAPITAL LENT. 

Caroline. And will that be the subject of our next 
conversation ? 

Mrs B. No ; we have yet many general remarks to 
make upon revenue. And it will be necessary also, 
before we turn our attention to trade or commerce, that 
you should understand the nature and use of money, 
without a knowledge of which it would be extremely dif- 
ficult to render the subject clear and perspicuous. 



CONVERSATION XIV. 

ON THE REVENUE OF THOSE WHO DO NOT EMPLOY 
THEIR CAPITAL THEMSELVES. 

Rent ; or income derived from letting land. — Interest of 
Money, or Income derived from Loans. — Causes of the 
different rate of Interest yielded by land or by money. 
— Causes of the fluctuations of Interest. — Rate of 
interest in India, in China, and. in America. — of 
Usury. — Government Loans, or income derived from 
the funds. — Of unproductive laborers, or those who 
derive an income from the expenditure of others. 

CAROLINE. 

1 THINK I now understand very well how an income 
is derived from agriculture and manufactures ; and also 
how it is produced by trade ; but there are many men of 
property who follow none of these occupations ; how, 
therefore, can their capital yield an income ? 

Ms B. When a man possesses a very large pro- 

663. What should one understand before attention is turned to 

trade and commerce ? 664. With what question does Caroline 

commence the 14th conversation ? 665. How is her question 

answered ? 



REVENUE FROM CAPITAL LENT. 183 

perty, he frequently will not be at the trouble of employ- 
ing it himself; but will engage some other person, to do 
it for him. You have seen that a landed proprietor who 
does not farm his own estate derives a revenue from the 
farmer in the form of rent. 

Caroline. But I allude to men of fortune without 
landed property, who live upon their income, although 
their capital is not employed. 

Mrs B. Reflect a moment and you will be con- 
vinced that no capital can yield an income without being 
employed. If, therefore, the owner does not invest it 
in some branch of industry himself, another person must 
do it for him. A capitalist under such circumstances 
may be supposed to say " I am possessed of an ample 
slock of subsistence for laborers and of materials for 
workmanship, but I will engage some other person to 
take charge of so troublesome an undertaking" as that of 
setting the people to work, and collecting the profits 
derived from their labors." 

Caroline. This person must be handsomely remu- 
nerated for the time and pains he bestows on the man- 
agement of a capital which is not his own. 

Mrs B. No doubt; a considerable share of the 
profits derived from the use of capital must go to him 
who takes charge of it : but when a man's property is 
very large, he would rather lose that share than be at 
the trouble of managing it himself. Thus you see that 
the employer and the proprietor of capital are frequently 
different persons. 

Caroline. Yet I do not recollect ever to have heard 
of a man of fortune making use of an agent to employ 
his capital. 

666. Can any capital yield an income without being employed ? 

667. How would a person possessed of capital which he did 

not wish to employ himself reason upon the subject ? 668, Is 

the employer of capital always the same person who owns it ? 



184 REVENUE FROM CAPITAL. LENT. 

Mrs B. He does not engage an agent on his own 
account, but he lends his capital to some person who 
invests it either in agriculture, manufactures, or trade, 
and who pays him so much per cent for the use of it. 
This is called lending money at interest. 

Caroline. Is it then simply money that is lent ; or 
capital consisting of produce f 

■Mrs B. It eventually comes to the same, for money 
gives the borrower a command over a proportional share 
of the produce of the country. If the money would 
not purchase the things which the borrower wanted, 
it would not answer his purpose ; but it will procure 
him either materials or implements for work, mainte- 
nance for laborers, stock for farming, or merchan- 
dise for trade. In a word, it will enable him to exert 
his industry in whatever way he chooses. 

Caroline. I should have imagined that it would have 
been more advantageous to the capitalist to have engaged 
an agent at a stipulated salary, for the purpose of under- 
taking the use of his capital ? 

Mrs B. Your plan would probably not answer so 
well; for if, instead of lending his capital at interest, a 
man of property paid an agent to employ it for him, the 
agent would be less cautious what risks he engaged in, 
as he would not be a sufferer by losses. 

Caroline. But is not the loan of capital at interest 
liable to the same objection? If the employer of capital 
be ruined, the proprietor of it must share the same fate. 

Mrs B. This not unfreqiiently happens ; yet there 



669. How does a person cause his capital to be productive, if he 
is not disposed to use it himself? 670. What is this way of dis- 
posing of capital called ? 671. What question does Caroline askr 

672. What answer is given to the question of Caroline on the 

lending of capital ? 673. Why could it not be best for a capitalist 

to employ an agent to do the business on his own account .' 674. 

"What question does Caroline ask as to the risk in loaning money .' 



REVENUE FROM CAPITAL LENT. 185 

is less risk incurred in this mode than if the employer of 
capital could injure tlie proprietor without being himself 
involved in the same fate ; and it would be so if he acted 
as clerk or agent, as he would lose only his salary, although 
the proprietor might be utterly ruined. 

Prudent men seldom lend capital without good secu- 
rity. If the loan is made to a merchant, it is usual to 
require other merchants, or men of property, to become 
responsible for the payment. If to a man of landed 
property, the capital is lent upon the security of his 
estate ; that is to say, if the loan be not repaid according 
to agreement, the lender has the right to seize that par- 
ticular property, upon the security of which the capital 
was advanced. This is called lending money upon the 
security of mortgage. 

Caroline. That must be the best kind of security, 
for the land cannot be made away with. It is making 
fixed capital responsible for circulating capital. 

The man who borrows capital with a view to employ 
it, must necessarily expect to make greater profits than 
will pay the interest of the loan, otherwise he would be 
no gainer by it. 

Mrs B. Certainly. The average profits of the use 
of capital may be estimated at about double the interest 
of money. Legal interest, that is to say, the highest 
rate which the law allows to be given, is five per cent, 
and the usual profits of trade are about ten per cent. 

Caroline. Therefore the lender and the borrower, 
or in other words the proprietor and employer of capital, 
commonly divide the profits arising from it equally be- 



675. Why is risk less to the capitahst in lending his money on 

interest than in using it by an agent on his own account ? 676. 

What security do capitalists usually require in lending money ? 

677. What is reckoned the best security ? 678. What may be 

reckoned the average profits on the use of capital ? 679. What 

is the highest legal interest in England ? 

16* 



186 REVENUE FROM CAl'ITAL LENT. 

tween them ; the one making as much by his property 
as the other by his industry. 

The landed proprietor who lets his land to a farmer, 
I conceive to be situated in the same manner as the man 
who lends his capital at interest, neither of them choosing 
to undertake the employment of their capitals themselves, 
but procuring some other person to do it for them ; and 
the rent the farmer pays for the use of the land is simi- 
lar to the interest paid for the use of capital. 

Ms S. It is so ; and the advantages derived from 
letting land are analogous to those that result fi-om the 
loan of capital. We have observed that if the farmer, 
instead of paying a rent, received a certain stipend for 
his labor, and reserved the whole of the produce for 
the landlord, he v/ould certainly be less attentive to the 
land than if his gains resulted from the value of the pro- 
duce raised. 

There is, however, one essential difference between 
borrowing capital and i-enting land. The man who bor- 
roW'S capital to be employed in trade or manufactures, 
requires nothing more to enable him to prosecute his 
business. Whilst the farmer who borrows land cannot 
undertake the cultivation of it without the assistance of 
another capital, which he must either possess or borrow 
for the purpose. 

Caroline. Then there is another difference. The 
landed proprietor and the farmer do not divide the 
profits arising from the cultivation of the land equally 
between them, as is usually, you say, the case with the 
lender and borrower of capital ; for the farmer makes 



680. What does Caroline suppose to be analogous to the lending 

of money? 681. W^hat is said of the farmer whether his gains 

depend on a fixed stipend or on the profits of the produce? 682. 

What difference is mentioned between borrowing capital and rent- 
ing land ? 683. What other difference is mentioned by Caro- 
line ? 



REVENUE FROM CAPITAL LENT. 187 

greater profits by the use of the land than the proprietor 
by the rent. 

Mrs B. There are several reasons for this differ- 
ence. In the first place you must recollect that the 
profits of capital vary with the degrees of risk to which 
it is exposed ; and then consider that an income derived 
from the rent of land, is much more secure than any 
other kind of revenue. For if the farmer ruin himself, 
he cannot make away with the land : he maybe obliged 
to quit his farm, but then his slock is liable to seizure for 
the payment of rent. 

Another considerable advantage attached to landed 
property is, that in proportion as agriculture improves, 
the produce of the land increases: this augments the 
profits of the farmer, and enables the landlord to raise 
his rent. And lastly, we must call to mind the obser- 
vations we made on the origin of rent; and we shall 
find that in proportion as agriculture extends, and new 
and inferior lands are taken into cultivation, the rent of 
land rises. If you weigh all these advantages, you will 
no longer be surprised that a landed proprietor should 
be satisfied with making between three and four per 
cent of his capital, instead of lending it at five per cent 
interest, with more or less risk of loss, and ^ cer- 
tainty that the capital will not improve. 

Caroline. The real pi'ofits, therefore, to be derived 
from the loan of capital perfectly secure, is between three 
and four per cent, and whatever is received above that 
sum may be considered as an indemnification for the 
risk to which it is exposed ? 

Mrs B. [f you take the improvable nature of rents, 

684. What is the first reason assigned for this difference ? 

685. What is another advantage named as heing attached to landed 

property ? 686. What is the last reason given why the landed 

proprietor is willing to receive a less per centage than is usual in the 
loaning of money ? 



188 REVENUE FROM CAPITAL LENT, 

as well as their perfect security into the calculation, some 
deduction may be allowed in consideration of the certain 
prospect of future increase ; the profits to be derived 
from the loan of capital, even when the security is per- 
fect, may therefore be estimated somewhat higher than 
that which is afforded by the rent of land. 

We must now make a few observations upon the in- 
terest of money.' 

The interest of money, or price paid for the loan of 
capital, was formerly much higher than it is at present. 
It has gradually diminished for some centuries past, in 
the same proportion as national wealth has increased. 

Caroline. And why should that be the case ^ 

Mrs B. As the capital of a country becomes larger, 
the profits to be derived from it diminish, and the lower 
the profits to be made by the use of capital, the lower 
the rate of interest which the borrower can afford to pay 
for it. 

Caroline. Then it seems that as a nation grows rich, 
the individuals who compose it become poor? 

Mrs B. Oh no ; have you forgotten the observations • 
we made upon the wages of labor, and upon the origin 
of rent ? As a nation advances in opulence, that is to 
say, when its capital increases in a still greater ratio than 
its population, the dem.and for labor, and consequently 
its wages, rise, and leave smaller profits to the capital of 
their employers. On the other hand, as a country im- 
proves in wealth and' population, inferior land is take 
into cultivation and rents rise. 



687. Why may the loan of money on security that is perfect re- 
ceive profits somewhat higher than that which is afforded by the 
rent of land ? 688. How is the present rate of interest on mo- 
ney compared with what it formerly was ? 689. In what pro- 
portion has it decreased? 690. Why should that be case? 

691. What effect does Caroline suppose national wealth will have 
on individual wealth ? — —692. What reply does Mrs B make in 
proof that that is not the fact ? 



REVENUE FROM CAPITAL LENT. 189 

Caroline. Is it ihen the landed proprietor and the 
laborer who are gainers by national opulence, and the 
employers of capital who are the losers by it? 

Mrs B. No; they also are eventually gainers. The 
man who employs capital, whether it be his own, or bor- 
rowed at interest, is a productive laborer of a superior 
description, and in proportion as capital, and consequent- 
ly the demand for the employers of capital, increases, 
the better is he remunerated : this additional remunera- 
tion arises from the greater quantity of capital at his 
command ; for though the rate of his profits be reduced, 
let us suppose from ten to eight per cent, he finds him- 
self compensated for that difference from the additional 
quantity of capital he has to employ. In our conversa- 
tion on the wages of labor, you may recollect the colo- 
nist whom we supposed to be supplied with laborers by 
a shipwrecked crew. Do you think they had any cause 
to regret the change that took place, when these labor- 
ers had produced them an additional capital, although 
it obliged them to pay higher wages ? And in regard 
to the borrowers of capital, the diminution of profit is 
compensated by the lower rate of interest. 

Caroline. National opulence diffuses itself, then, on 
all ranks of people ; and, like the sun, spreads its rays all 
round, from the palace of the sovereign to the cottage 
of the peasant ! 

Mrs B. When capital is allowed to follow its natural 
course, this will always be the result. During the reign 
of the emperor Augustus, the interest of money at Rome 
fell from ten to four per cent, owing to the great influx 

693. What further question does Caroline put as to the gain and 

loss of capital? 694. But how is the man who employs capital 

also better paid for his labor ? 695. How is the diminution of 

profits compensated to the borrower of capital .' Q9Q. Under 

what circumstances will national opulence diffuse itself upon all 

ranks of people ? 697. What is said of the interest of money at 

Rome in the reign of Augustus .'' 



190 REVENUE FROM CAPITAL LENT. 

of wealth from the conquered provinces. In India, 
where the proportion of capital to the number of laborers 
is comparatively small, wages are extremely low, and 
the profits of capital and interest of money exorbitantly 
high. The common rate of interest is twelve per cent, 
but I have heard that it is not unusual to make as much 
as twenty or even thirty per cent interest. In China, 
interest is six per cent per month, or thirty six per cent 
a year. 

Caroline. And is interest low in America, where 
laborers are scarce and wages high ? 

Mrs B. No, it is not 5 on account of the great pro- 
fits made by agriculture. In a country not yet fully 
peopled, where there is so great a choice of fertile land, 
that scarcely any of an inferior quality is brought into 
cultivation, and consequently where litde or no rent is 
paid, the cultivator can afford to give high wages, and 
yet make great profits ; and wherever great gains can 
be made by the use of capital, high interest will be given 
for the loan of it. Therefore, though capital has been 
increasing in America more rapidly than in any other 
country ; yet as immediate and advantageous employment 
is found for every accession of capital by the cultivation 
of new and fruitful lands, the interest of money does not 
fall. 

In all old established, fully peo])led countries, the low 
interest of money is almost invariably a sign of prosperi- 
ty ; for it indicates an increasing capital, a low rate of 
profit to those who employ it, and high wages to the la- 
boring poor, 

698. How is capital and the rate of wages in India ? 699. 

What is the rate of interest in China? 700. Is interest low in 

America, where laborers are scarce and wages are high ? 701. 

Why is it not low ?- 702. What is the rate of interest in old es- 

tahlished and fully peopled countries ? 703. What does low i»« 

terest there indicate ? 



REVENUE FROM CAPITAL LENT. 191 

There are circumstances, however, in which the in- 
terest of money may fall independently of an augmenta- 
tion of capital. This happens when the market, that is 
to say, the means of disposing of the produce of the coun- 
try, is suddenly contracted. The home market then be- 
comes overstocked, the price of goods falls so low as to 
leave very little profit, and if this state of things is of 
long continuance, the interest of money will sink in pro- 
portion to the diminution of profits. On the other hand, 
there are circumstances which sometimes produce a rise 
in the interest of money without indicating any diminu- 
tion of prosperity, but are in fact to be considered as 
proofs of an opposite nature. This happens when the 
market is suddenly enlarged : a circumstance which is 
frequently occasioned by the opening of a new commer- 
cial intercourse with foreign countries, or the introduc- 
tion of any new source of industry at home. A greater 
demand for our produce in other countries occasions a 
greater demand for capital, and a consequent rise in the 
rate of interest ; but in this case the rise is only tempo- 
rary, because the increased industry of the country ra- 
pidly produces an augmentation of capital equal to the 
demand, and a proportional fall in the interest of money. 

Caroline. But [ thought that the interest of money 
was fixed by law, and incapable of fluctuation ? 

Mrs B, The legal interest is 5 per cent ; it may fall 
below that rate, though in this country it cannot rise 
above it without becoming usury. In former times, to 
receive any remuneration for the loan of money was re- 
garded much in the same light as usury is at present ; 



704. Under what circumstances may the interest of money fall 

independently of an augmentation of capital ? 705. And may the 

rate of interest rise without indicating any diminution of prosperity ? — 
706. Under such circumstances is the increased rate of interest per- 
manent ? 706. What was formerly thought of receiving interest ? 



192 REVENUE FROM CAPITAL LENT. 

that is to say, as taking an unfair advantage of the bor- 
rower. 

Caroline. Such an opinion could have been enter- 
tained by those only who understood nothing of the re- 
productive nature of capital ; for had they been aware 
of the profits to be made by the employment of money, 
they could not have considered it as unfair to pay for the 
use of it. 

Mrs B. Our forefathers had no pretensions to a 
knowledge of political economy ; it is a science of later 
date. The prejudice against lending money at interest 
appears not to have prevailed in very ancient times, but 
to have originated in the darkness of the middle ages ; 
for the interest of money was legally instituted both 
amongst the Grecians and the Romans. It must tiave been 
an established practice in the time of Solon, since it is 
upon record that he reduced the legal interest to 12 per 
cent. The Bramins in India are said to have taken 21-2 
per cent monthly so far back as 3000 years, and yet le- 
gal interest was not established in Europe until the year 
1546. 

Macpherson, in his history of commerce, makes the 
following observations on the unpopularity of receiving 
interest for the loan of money. " In the year 1251," he 
observes, "the consequence of the clamor and perse- 
cution raised against those who took interest for the use 
of money was so violent, that they were obliged to charge 
it much higher than the natural price, (which if it had 
been let alone would have found its level,) in order to 
compensate for the opprobrium, and frequently the plun- 

707. When did the prejudice against lending money at interest 
originate? 70S. What was the case among the Gieeks and Ro- 
mans ? 709. What fact is stated of the Bramins relating to the 

subject? 710. When was legal interest established in Europe ? 

711. What remarks are quoted from Macpherson, on the prejudice 
against receiving interest ? 



REVENUE FROM CAPITAL LENT. 193 

der which they suffered ; and thence the usual rate of 
interest was, what we sliould now call most exorbitant 
and scandalous usury." And what we now call exorbi- 
tant and scandalous usury proceeds in a great measure 
from a similar prejudice ; which prevents tl'e interest of 
money, like all other pecuniary interests, from finding its 
natural level, and stamps witii criminality, and the odium 
of usury, any bargain in which money is lent at a higher 
interest than five per cent, however great the risk in- 
curred by the lender. Why should there be a limit to 
the terms on which money may be borrowed, any more 
than to the borrowing, or I should rather say, to the hir- 
ing any other commodity ? 

Caroline. Would not such unlimited freedom of in- 
terest afford too great encouragement to capitalists to sup- 
ply prodigals and thoughtless youths with money, and 
thus facilitate their means of squandering it? 

Mrs B. Menof this description .find no difficulty in 
borrowing of usurers, provided they are able to give' se- 
curity for the payment, and witiiout such security they 
would not obtain the loan of money either from men of 
respectability or from crafty usurers. The only differ- 
ence now is, that they must pay a higher price for the 
loan, because the lender requires to be remunerated, not 
only for the use of the money, and the risk he" incurs, but 
also for the ignominy and criminality attached to the 
proceeding; this necessarily takes it out of the hands of 
men of honorable character, 'and throws it into those of 
men, who, having no value for reputation, are much more 
likely to take undue advantage of the distress of men 



712. What does Mrs B. say of the existing prejudices against 

what is called usury ? 713. What question does Caroline ask in 

objection to Mrs B.'s suggestion in favor of unlimited interest? 

714. What reply is made to this question ? 715. Wherein does 

Mrs B. think that persons, in many cases, have to pay a higher in- 
terest than they would do if no laws existed upon the subject? 
17 



194 REVENUE FROM CAPITAL, LENT. 

who are in urgent want of money, and of the unguarded 
thoughtlessness of prodigal youth. 

There is yet another means by which a man of pro- 
perty may derive an income from his capital without em- 
ploying it himself; it is by lending it to a borrower who 
is dislinguislied from all others by the singularity of his 
dealings — who borrows not only without any intention of 
making profits by the use of the capital; but also in ge- 
neral, without any prospect of repaying the principal of 
the debt. 

Caroline. Without any prospect of repaying the debt ! 
And where can tiiey find men weak enough to lend 
capital on such terms ? - 

Mrs B. This extraordinary borrower is no other 
than the government of the country. When government 
makes a loan, that is to say, borrows capital, it is for the 
purpose of spending it as soon as procured ; and the 
proprietors of this capital, or, as they are usually denomi- 
nated, the public creditors or stockholders, scarcely ever 
expect that the debt should be repaid. Yet notwith- 
standing this circumstance, men are willing to lend their 
money to government even upon lower terms than to 
other borrowers. This arises from two causes ; the first 
that the security of government for the punctual payment 
of the interest is better than that of any individual; and 
the second, that the public creditor has an indirect means 
of getting back his capital whenever he pleases, without 
being repaid by government. 

Caroline. In what way ? 

Mrs B. By selling his right to receive the interest to 



716. What other means is mentioned, by which a man of pro- 
perty may derive income from his capital without improving it him- 
self ? 717. For what purpose does government make a loan ? 

718. What are the proprietors of this capital called ? 719. Do 

they expect to receive it again ? 720. Why then do they so 

Readily lend it.' 



REVENUE FROM CAPITAL LENT. 195 

sny individual who wishes to invest his capital in the 
funds, and who will then stand in the place of the original 
creditor. 

Caroline. And can he always sell that right for the 
sum he originally lent to government. 

Mrs B. Not always exactly ; he will sometimes get 
more and sometimes less, according to the state of the 
market. If there are many creditors or stockholders 
(jesirons to sell, and but few capitalists wishing to buy, 
he will get less ; if many buyers and few sellers, he will 
obtain more ; in the latter case the stocks are said to be 
high, or rising ; in theYormer to be low, or falling. 

Caroline. But since government spends the capital 
borrowed instead of deriving any profit from it, by what 
means is the interest paid ? 

Mrs B. It is paid by taxes levied expressly for that 
purpose. 

Caroline. If then government spends what it bor- 
row^ed, the capital no longer exists, and the stockholder 
remains possessed of only an imaginary or fictitious 
capital. 

Mrs 'B. He remains possessed of the right to receive 
an annual payment, or annuity equal to the stipulated 
interest, till the government pays him back the principal. 
And this annuity (where the government can be depend- 
ed upon) will always sell for its value to such persons as 
have capital that they wish to lend at interest. It is thus 
that the stockholder is enabled to realize this fictitious 
capital whenever he chooses, by selling his stock. The 
capital is therefore, not lost to the individual ; but it is 

721. What indirect method is there for getting back again this 
capital ? 722. By what circumstances is the sale of this descrip- 
tion of property effected? 723. By what means is the interest 

paid on money loaned to government ? 724. What is the right 

of the government stockholders ? 725. In what respect is such 

pgipital lost ? 



196 REVENUE FROM CAPITAL LENT. 

entirely lost to the country. The stock may be sold, but 
the sale does not recreate the capital that lias been spent; 
it merely transfers to the seller capital already existing in 
tlie hands of the buyer, and which would equally have 
existed whether tlie stock were sold or not. So long 
however, as it can be exchanged for real capital, and in 
the meantime produces a substantial income to the pos- 
sessor, it affords him all the enjoyments that can be de- 
rived from wealth. 

Caroline, And is it not very injurious to the pros- 
perity of a country that the government should spend its 
capitcil ? 

Mrs B. No doubt ; but under some circumstances 
it is an unavoidable evil. In cases of urgent danger 
during a war, it is sometimes necessary to raise larger 
suras of money, and with more expedition, than can be 
obtained by taxes ; recourse is then had to loans, which, 
if not paid off, accumulate by repetition, and become at 
length a heavy national debt, which is a gr^at burden to 
the country, owing to the taxes that must be raised in 
order to pay the interest. 

We may return to this subject at some future time ; 
let me now ask you whether you fully understand how 
those who do not employ their capital themselves derive 
an income from it } 

Caroline. ' Througli the agency of others, who if the 
capital consists in land, pay them rent ; if in money, pay 
them inteiest. 

Mrs B, Very well ; take care, however, not to be 
misled by the terra money ^ for no man's capital really 
consists in money. It must consist either in lands or 

726. How lono; can 2;overnnient stock capital afford the possess- 
or all the enjoyments to be derived from wealth ? 727. Is it in- 
jurious to the prosperity of a courtry for the government to spend 

its capital ? 728. Under what circumstances is it necessary for a 

government to obtain money in this way ? 729. In what does 

capital consist ? 730. What has money to do with capital ? ■ ' .- 



REVENUE FROM CAPITAL LENT. 197 

saleable produce, rude or manufactured ; capital is 
merely estimated in money. And you cannot, as I said 
before, have clear ideas on this subject until the nature 
and use of money have been explained to you. 

We have now examined all the modes by which men 
derive a revenue from their capital; there yet remains 
to be noticed a class of men who are maintained by the 
revenue of others. 

Caroline. Do you mean laborers, who are maintained 
by wages and bring a profit to their employers ? 

Mrs B. No ; these, whom we havcj distinguished 
by the name of productive laborers, are maintained by 
the capital of others ; whilst the class of men to whom I 
now allude are maintained by the income of others. 
They are laborers, it is true ; but of this peculiar descrip- 
tion that their labor is totally unproductive ; they con- 
sume without reproducing : their labor, therefore, can 
add nothing to the future wealth of the country, and 
hence they are called unproductive laborers. 

Caroline. I think I guess what description of peo- 
ple you mean ; are not menial servants unproductive 
laborers ? 

Mrs B. Yes, they are ; for their labor, however 
useful, does not augment the riches of the country. A 
productive laborer is paid out of the value of the work he 
produces; this work remains with his employer, and may 
be either accumulated or exchanged for other commodi- 
ties ; but the labor of the menial servant, so far from 
increasing the revenue of his master, is an expense to 
him, his wages being necessarily paid with the produce 
of some other labor. 

Caroline. There is no doubt an essential difference 
between these two kinds of laborers : keeping a number 

731. How are productive laborers maintained ? 732. Who are 

unproductive laborers ? 733. Why are servants called unpix)- 

ductive laborers ? 734. How is the servant supported ? 

17* 



198 REVENUE FROM CAPITAL LENT, 

of workmen is a source of wealth, whilst keeping a num- 
ber of servants is a source of expense. 

Mrs B. The one is the employment of capital ; the 
other the expenditure of income : but the class of un- 
productive laborers is far from being ccr.fined to menial 
servants ; it extends to all the servants <:>f the public 5 
actors, singers, dancers, and ali those who are maintained 
by the productive labor of others, are of this descrip- 
tion. 

Caroline. Is it not to be regretted that these people 
cannot be compelled to a more useful mode of employ- 
ment? 

J\Irs B. Their labor, though of an unproductive na- 
ture, is generally useful. Servants, for instance, by 
relieving the productive laborer of much necessary 
work, enable him to do more than he could otherwise ac- 
complish. Thus a man engaged in the employment of 
a considerable capital can spend his time to greater ad- 
vantage, both to himself and to the community, than in 
cleaning his own shoes and cooking his own dinner. 

Caroline. The use of servants is evidently attended 
wit!) some of the benefits of the division of labor. 

Mrs B. You will probably be surprised to hear that 
many of the most valuable ranks of society are included 
in the class of unproductive laborers. The divine, the 
physician, the soldier, ministers of state, and magistrates, 
are of this description. 

Caroline. I did not imagine that the class of unpro- 
ductive laborers had been so respectable. And al- 
thoug'i tiieir labor is of an unproductive nature, they are, 

735. Who are called unproductive laborers besides menial ser- 
vants ? 736. What question does Caroline ask in relation to un- 
productive laborers ? 737. What cases are mentioned to show- 
that the labor of servants is necessary ? 738. What are some of 

the higher classes of unproductive laborers? 739. What com- 
parison does Caroline make between such unproductive laborers, 
and certaiu others which are considered productive .' 



I! 



ON VALUE AND PRICE, 190 

I think, in many instances more valuable members of 
society tiian some of the productive laborers. A magis- 
trate, who faithfully administers justice; a physician, 
who restores health ; a clergyman, who teaches religion 
and morals 5 are certainly of more essential benefit to 
society than the confectioner or the perfumer, or any of 
those producti^i?e laborers who are employed in the fab- 
rication of luxuries. 

Mrs B. No doubt they are. I do not, however, 
consider luxuries as wholly devoid of advantage. In a 
future conversation we shall treat of the subject of ex- 
penditure ; we shall then have an opportunity of exam- 
ining how far luxury is beneficial, and under what cir- 
cumstances it is prejudicial to the welfare of society. 



CONVERSATION XV. 



ON VALUE AND PRICE. 



Of the value of commodities.' — Of the distinction between 
exchangeable value and price. — Of utility considered 
as essential to value. — Of the cost of production, or 
natural value of commodities.-^— Of the component 
parts of the cost of production, rent, profit, and 
wages. — Of their iinperfection as a measure of value. 
— Of supply and demand. — Of the component parts 
of the exchangeable value of commodities. — High 
price of commodities arising from scarcity. — Low 
price arising from excessive supply. — Low price 
arising from diminution of cost of production. 

740. Does Mrs B. consider luxuries wholly devoid of advan- 
tage ? 



200 ON VALUE AND PRICE. 

MRS B. 

Before we proceed to the subject of trade, it is ne- 
cessary that you should understand what is meant by the 
value of commodities. 

Caroline. That cannot be very difficult ; it is one of 
the first things we learn. 

Mrs B. What is learnt at an age when the under- 
standing is not yet well developed, is not always well 
learnt. What do you understand by the value of com- 
modities ? 

Caroline. We call things valuable which cost a great 
deal of money ; a diamond necklace, for instance, is 
very valuable. 

J\Irs B. But if, instead of money, you gave in ex- 
change for the necklace, silk or cotton goods, tea, sugar, 
or any other commodity, would you not still call the 
necklace valuable ? 

Caroline. Certainly I should ; for, supposing the 
necklace to be worth 1000/., it is immaterial whether I 
give 1000/. in money, or 1000/. worth of anything else 
in exchange for it. 

JVLrs B. The value of a commodity is therefore esti- 
mated by the quantity of other things generally for 
which it will exchange, and hence it is frequently called 
exchangeable value. 

Caroline. Or in other words, the price of a com- 
modity. 

Mrs B. No ; price does not admit of so extensive 
a signification. The price of a commodity is its ex- 

741. What should loe understood before proceeding to the sub- 
ject of trade ? 742. What answer does Caroline give to the 

question — What is to be understood by the value of commodities? 

743. What case does Mrs B. suppose, in substituting some 

other article in the place of money ? 744. How does Caroline 

illustrate this supposition ? 745. How does Mrs B. say the value 

of commodities is to be estimated ? 746. How does the price 

differ from the value of a commodity ? 



ON VALUE AND PRICE. 201 

changeable value, estimated in money only. It is neces- 
sary that you should remember ihis distinction. 

Caroline. But what is it that renders a commodity 
valuable ? I always thought that its price was the cause 
of its value ; but 1 begin to perceive that 1 was mistaken : 
for things are valuable independently of money ; it is 
their real intrinsic value which induces people to give 
money for them. 

Mrs B. Certainly ; money cannot impart value to 
commodities ; it is merely the scale by which their value 
is measured ; as a yard measures a piece of cloth. 

Caroline. I think the value of things must consist in 
their utility, for we commonly value a commodity ac- 
cording to the use we can make of it. Food, clothing, 
houses, carriages, furniture, have all their several uses. 

Mrs B. That is very true ; yet there are some 
things of the m.ost general and important utility, such, 
for instance, as light, air, and water, which, however in- 
dispensable to our welfare, have no exchangeable value; 
nothing is given for them, nor can anything be obtained 
in exchange for them. 

Caroline. No one will give anything for what is so 
plentiful, and so readily obtained that every one may 
have as much as he requires, without making ai'iy sacri- 
fice ; but as light, air, and water, are essential even to 
our existence, surely they should be esteemed valuable. 

Mrs B. \n political economy we can consider as 
valuable such commodities only as are susceptible of re- 
ceiving a value in exchange ; for this purpose the com- 
modity must neither be produced in so unlimited a man- 
ner, nor so easily obtained that it may be had for nothing. 



747. What gives value to commodities? 74S. What is said 

of money ia relation to the value of commodities ? 749. What 

articles are mentioned which have no exchangeable value ' 750. 

Why is this the case ? 751. In political economy what objects 

are considered valuable ? 



202 ON VALUE AND PRICE. 

It must on the contrary, be in such request that men are 
willing to give something for it. Thus clothes, houses, 
furniture, tliough certainly less useful than light, air, and 
water, have exchangeable value. 

Nature works for us gratuitously ; and when she sup- 
plies us with articles in such abundance that no labor is 
required to procure them, those articles have not ex- 
changeable value : but no sooner does the labor of man 
become necessary to procure us the use and enjoyment 
of any commodity, than that commodity acquires a value ; 
either a price is paid for it in money, or other things are 
given in exchange for it. Light, air, and water, are the 
free and bountiful gifts of nature, but if a man constructs 
a lamp, we must pay for the light it diffuses : if we are 
indebted to his labors for a ventilator, or even a fan, we 
pay for the air they procure us ; and when water is con- 
veyed through pipes into our houses, raised by pumps, 
or brought to us in any manner by the art of man, a 
price is paid for it. 

Caroline. Workmen must of course be paid for the 
labor they bestow, whether it be in the production of a 
commodity or merely in its conveyance. But it appears 
to me, Mrs B., that it is labor rather than utility that 
constitutes value, for however we may enjoy the utility, 
it is the labor we pay for. 

Mrs B. That labor, you will observe, is valuable 
only if it gives utility to an object. Were a man to 
construct or fabricate commodities which had neither 
utility, curiosity, or beauty, the labor he bestowed upon 
them would give them no value, and if he exposed them 
for sale, he would find no purchasers. 

752. How does nature work for us ? 753. When does any- 
particular commoiJity acquire a value ? 754. What cases of illus- 
tration are given to show the difference between articles that have 

an exchangeable value and those which have not ? 755. What 

does Caroline suppose gives value to a commodity rather than 
Utility ? 



ON VALUE AND PRICE. 203 

Caroline. That is true ; but the words beauty and 
curiosity, which you have just used, have raised another 
objection in my mind, to utility being essential to Value. 
I recollect your defining wealth, to be every article of 
utility, convenience, or luxury ; wealth, no doubt, always 
implies value, but there are many articles of luxury that 
are perfectly devoid of utility, and which are valued 
either for their beauty, their curiosity, or their rarity. 
What for instance, is more valuable than diamonds ? and 
yet they are of no use. 

Mrs B. When we say that utility is essential to value, 
the expression is used in the most enlarged sense. 
Those who wear diamonds find them useful to gratify 
their vanity or pride, or to support their pride in life. 
The utility of luxuries must generally be considered in 
this point of view. 1 should, however, tell you, that 
Adam Smith distinguishes two kinds of value ; the one 
arising from utility, the other from what can be obtained 
in* exchange. He says, " The word value, it is to be 
observed, has two different meanings : it sometimes 
expresses the utility of some particular object, and some- 
times the power of purchasing other goods which the 
possession of that object conveys. The one may be 
called value in use, the other value in exchange. The 
things which have the greatest value in use, have fre- 
quently little or no value in exchange ; and, on the con- 
trary, those that have the greatest value in exchange, 
have frequently little or no value in use. Nothing is 
more useful than water, but it will purchase scarce any- 
thing ; scarce anything can be had in exchange for it. 
A diamond on the contrary, has scarce any value in use, 

757. What does Caroline mention as possessing value, but is 
without utility ? — 758. When a^e we to say utility is essential to 

value? 759" In what sense are luxuries valuable? 760. 

What distinction does Adam Smith make in the meaning of the term 

value ? 761. What illustration does he give of the value in use^ 

and the value in exchange ? 



204 ON VALUE AND PBICE. 

but a very great quantity of other goods may frequently 
be had in exchange for it." 

Later writers on political economy, whose opinion I 
have followed, have rather gone farther than differed in 
opinion from Adam Smith, by tracing all value to the 
same source utility, a doctrine which leads to the con- 
clusion that it is the application of the labor of man to 
commodities which gives them exchangeable value. 

The exchangeable value of a commodity estimated in 
money, we have said, constitutes its price. This gene- 
rally corresponds with the cost of production of the 
commodity, that is to say, to the expense that has been 
bestowed on a com.modity in order to bring it to a sale- 
able state. You can tell me now, I suppose, why this 
bookcase is more valuable than that table. 

Caroline. Because more workmanship has been 
bestowed upon it, therefore more labor must be paid for. 
But, Mrs B., the money which this bookcase cost does 
not all go to the workmen who made it ; the materials 
of which it is made must be paid for : the upholsterer 
who sold it derives a profit from it. 

Mrs B. It was his capital which purchased the raw 
materials, which furnished the tools, and set the journey- 
men to work ; without his aid the bookcase could not 
have been made. The price of commodities is the 
reward not only of those who prepared or fabricated 
them, but also of every productive laborer who has been 
employed in bringing them to a saleable state, for each of 
these concurred in giving value to the commodity. 

We have formerly observed that no work can be 
undertaken without the use of capital, as well to niain- 

762. What have some later writers done in explaining this sub- 
ject ? 763. To what does the exchangeable value of a commo- 
dity generally correspond ? 764. What objection does Caroline 

made in regard to the bookcase ? 765. How does Mrs B. reply 

to this objection ? 766. Without the use of what is it said that 

ro work can be done ? 



ON VALUE AND PRICE. 205 

tain the laborer as to supply him with the implements to 
work with, and the materials to work upon. Subsisting 
upon this maintenance, and working with these imple- 
ments, he is to transform the useless trunk of a tree into 
a useful piece of furniture, which acquires value in pro- 
portion as it acquires utility. The profit of capital is, 
therefore, a component part of the value of a commodity, 
as well as the wages of labor. There remains yet a third 
component part of the value of a commodity, which a 
little reflection will, I think, enable you to discover. 

Caroline. Agricultural produce must, besides the 
wages of labor, and profit of capita], pay the rent of the 
land on which it is raised. But this will not be the case 
with manufactured goods. 

Mrs B. The raw materials for manufactures are all, 
or almost all, the produce of land, and consequently 
must defray the expense of rent, the same as corn or 
hay. But rent does not enter into the price of commo- 
dities in the same manner as the profit of capital or the 
wages of labor, because, as you may recollect, rent is 
the effect, not the cause of the high price of commodi- 
ties. Dr Smith observes that " high or low wages are 
the causes of high or low price ; high or low rent is the 
effect of it. It is because high or low wages or profit 
must be made, in order to bring a particular commodity 
to market, that its price is high or low. But it is because 
its price is high or low, a great deal more, or very little 
more, or no more than what is sufficient to pay those 
wages and profit that it affords a high rent, or a low rent, 
or no rent at all." 

Let us now observe how the value of a commodity 
resolves itself into these three component parts. Take, 

767. What is the profit of capital termed ? 768. What is 

a third component part of the value of a commodity? 769. Where- 
in does not rent enter into the price of commodities in the same man- 
ner as the profit of capital or the wages of labor ? 
18 



206 ON VALUE AND PRICE. 

for instance, a load of hay ; its price pays, first, the 
wages of the laborer who cut down the grass and made 
it into hay ; then the profits of the farmer who sells it ; 
and lastly, the rent of the field in which it grew. This 
therefore, constitutes the whole costof production of the 
load of hay ; and may be called its natural value, 

Caroline. Pray let me try whether I could trace the 
various payments made to the several persons concerned 
in the production of a loaf of bread. — Its price must first 
pay the wages of the journeyman baker who made it ; 
then the profits of capital of the master baker who sells 
it ; next the wages of. the miller who ground the corn, 
and the profits of the master who employs him ; after- 
wards the wages of the several husbandmen who culti- 
vated the field of corn ; the profits of the farmer ; and 
lastly, a portion of the rent of his farm. 

Mrs B. Extremely well. Thus you see that the 
value of a commodity is composed of three parts, rent, 
p'o/i^, and wages ; the rent of the proprietor of the land, 
the profits of the several employers of capital, and the 
wages of the various laborers who give it value by ren- 
dering it useful, whence it becomes an object of desire, 
and consequently a saleable commodity. 

It sometimes happens that the proprietor of land, and 
farmer, and even the laborer, are united in one individ- 
ual. We have already observed that in many parts of 
America the cultivators of the land are botji proprietors 
and laborers, and reap the reward of rent, profit, and 
wages. 

Caroline. And in this country a cottager who pos- 

770. How does the value of commodity resolve itself into the 

three component parts ? 771. What may this value be called? 

772. How does Caroline trace the various payments made to 

the several persons concerned in the production of a loaf of bread ? 

773. What union of interests does Mrs B. say sometimes takes 

place ? 



ON VALUE AND PRICE. 207 

sesses a little garden cultivated by his own hands, and 
of which he brings the produce to market, likewise con- 
centrates in himself all the advantages of proprietor, 
capitalist, and laborer ; for he sells his vegetables for the 
same price as a market gardener, who has to deduct 
from the price the rent of the garden and the wages of 
the laborer. 

Mrs B. But he is not therefore the greater gainer, 
for if he has no rent to pay, it is because he has laid 
out a capital in the purchase of the land ; if he pays no 
wages, it is because he works himself, and employs that 
labor which might otherwise bring him wages : then 
some capital is used to purchase garden tools, manure, 
or whatever may be requisite for the cuhure of his gar- 
den. 

Caroline. I think I now understand perfectly well 
how rent, profit, and wages enter into the value of 
every commodity. I may say, for instance, so much 
rent, profit^ and wages has been expended in the pro- 
duction of this carpet, that therefore I must pay a sum 
of money for it, if I wish to purchase it ; but how am I 
thence to infer what sum of money it is worth-? 

Mrs B. By applying the same scale or measure to 
estimate the value of money, that you have applied to 
estimate the value of the carpet. Examine what quan- 
tity of rent, profit, and wages was bestowed uponlhepro- 
duction of the money, and you will be able to ascertain 
how much of it should be given in exchange for the 
carpet, or in other words, what the carpet is worth in 
money. I paid twenty guineas for this carpet ; I con- 
clude therefore that the cost of production of the carpet 
is equal to the cost of production of twenty guineas. 

775. Why is not the cottager a gainer by this union of interests ? 

776. What question does Caroline ask concerning the value of 

9. carpet ? 777. How does Mrs B. answer this question I 



208 ON VALUE AND PRICE. 

Caroline. But it would be impossible to calculate 
with any degree of accuracy the quantity of rent, profit, 
and wages which a commodity cost, and still less that of 
the fj^old or silver for which, it is sold. 

Mrs B. Nor is it necessary to enter into this calcula- 
tion ; it is by long experience only that the world forms 
an estimation of the relative value of different commo- 
dities sufficiently accurate for the purposes of exchange. 
The calculations to which we have been alluding, though 
true in principle, are by no means susceptible of being 
brougltt into common use. 

Caroline. Yet when barter was first introduced, one 
savage might say to another : "It is not just to offer me 
a hare, which is the produce of a day's hunting, in ex- 
change for a bow which I have spent three days in mak- 
ing 5 1 will not part with it unless you give me also the 
fruit which you gathered in the woods yesterday, and the 
fish you caught the day before; in short, I will not ex- 
change the produce of my toil andtrouble, for less than 
the produce of an equal share of your toil and trouble." 
And surely this is much more clear and siniple reason- 
ing than to say, that the bow is worth so fuuch money? 

Mrs B. To a savage unacquainted with money it 
certainly is ; but I believe that in the present times peo- 
ple understand better the value of a commodity esti- 
mated in money. 

Caroline. But if it were practicable to calculate 
with precision the quantity of rent, profit, and wages 
which had been expended on the production of commo- 
dities, that 1 suppose, would constitute an accurate mea- 
sure of their value. 

779. Wliat does Caroline say it would be impossible to do ? 

779. Does Mrs B. tliink it necessary to go into this calculation ? 

780. How is it, that the world forms a value of the relative 

value of different commodities ? 781. How aoes Caroline say 

a savage would reason when barter was first introduced ? 782. 

What does Caroline say would constitute an accurate measure of 
cpminpdities .'' 



ON VALUE AND PRICE. 209 

Mrs B, No ; because there are other circumstan- 
ces, which, as we shall presently observe, affect the va- 
lue of commodities. Besides, it would be impossible to 
calculate with any degree of accuracy the cost of pro- 
duction of a commodity, since rent, profit, and wages 
are all liable to vary in their own value ; and we cannot 
adopt as di fixed standard, a measure which is itself sub- 
ject to change. If we were to measure a piece of cloth ^ 
by a yard measure, which lengthened at one season of 
the year and shortened at another, it would not enable 
us to ascertain the length of the piece of cloth. Now rent 
varies much according to the situation of the land, and 
the nature of the soil ; profit according to the abundance 
or scarcity of capital ; but nothing fluctuates more than 
the wages of labor ; it differs not only in different coun- 
tries, but even in the same town, according to the 
strength, the skill, and the ingenuity of the laborer. A 
skilful artisan may not only do more work, but may do 
it in a superior manner, and he will require payment in 
the articles of his workmanship, not only for the labor 
he has bestowed on them, but also for the pains he has 
taken, and the time he has spent in acquiring his skill; 
the wages of a superior workman are for this reason 
much higher than those of a common laborer. Since 
therefore neither the quantity nor the quality of the la- 
bor bestowed on a commodity can be determined by the 
number of days or hours employed in producing it, time 
is not a measure of the value of labor; we must take 
into account the degrees of skill and attention which the 
work may require, as also the healthy, pleasant or un- 
pleasant, easy or severe nature of the employment, all of 
which are to be paid accordingly. 

783. Does Mrs B. think it possible to do this ? 784. Why 

does she say it cannot be done? 785. How does rent, profit, 

and wages of labor vary? 786. What must be tkken into the 

account in estimating the wages of labor ? 

18* 



210 ON VALUE AND PRICE. ' 

Caroline. Thus the bow which employed the savage 
during three days, might be worth twice the labor of 
ihe other savage during the same period of time; for 
much less skill is required to be a huntsman, than to be 
a fabricator of bows and arrows. 

Mrs B. On the other hand, we find that eight hours 
of the labor of a coal-heaver will be paid much higher 
than the same number of hours of a weaver's labor, be- 
cause although the latter requires more^ skill, the first is 
much more severe and unpleasant labor. But the wea- 
ver will receive greater wages than the farmer's laborer, 
because the work of the latter is both more healthy and 
requires less skill. 

Now since it is impossible to enter into a calculation 
of all the shades of these various difficulties, rent, profit, 
and labor can never form an accurate standard of 
value. 

Caroline. They have at least enabled me to acquire 
a much more clear and precise idea of value than I had 
before. 

Mrs B. Your idea of value is however yet far from 
being complete ; for there are, as I have just observed, 
odier circumstances to be considered independently of 
the cost of production, which materially influence the va- 
lue of commodities. In a besieged town, for instance, 
provisions have frequently risen to twenty or thirty times 
their natural value, and have increased proportionally in 
price. 

Caroline. Their increased price in this case is owing 



787. How does Caroline apply this in the case of the bow of the 

savage ? 788. What comparison is made between the labor of 

the coal-heaver and the weaver ? -789. And what one is made 

between the weaver and the farmer's laborer ? 790. What is 

the object of Mrs B. in these comparisons? 791. What other 

circumstance is mentioned as entering materially into the value of 
commodities ? 



ON VALUE AND PRICE. 21 I 

merely to the scarcity, not to any increase of value, for 
were they as plentiful as usual they would sell at the 
■usual price. 

Mrs B. Their high price is the consequence of 
tlieir increased value, for they would not only sell for a 
greater sum of money, but also exchange for a greater 
quantity of any commodities, except such as are convert- 
ible into food, 

Caroline. Unless perhaps it were gunpowder, or any 
kind of ammunition, which in a besieged town might be 
as much in request as food. 

Mrs B. Certainly ; in that case ammunition would 
rise in value as well as provisions. 

Plenty and scarcity are then circumstances which 
considerably affect the value of commodities. Tell me 
whether you understand the meaning of the words, plen- 
ty and scarcity _? 

Caroline. Yes, surely ; when there is a great quan- 
tity of any thing, it is said to be plentiful; — when very 
little, it is scarce. 

Mrs B. If there was very little corn in a desert 

island, should you say there was a scarcity of corn there .f* 

■ Caroline. No ; because as there would be no one 

to eat it, none would be wanted ; and scarcity implies an 

insufficiency. 

MrsB. And when a few years ago there was a scar- 
city of corn in this country, do you think that the whole 
of the island produced only a small quantity ? 

792 To what does Caroline say the increased price of provisions 

is owing ? 793. What does Mrs B. say of their high price ? 

794. What other article would also under like circumstances in- 
crease in value ? 795. What does Caroline understand by the 

terms plenty and scarcity ? 796. Wh^t question does Mrs B. ask 

in relation to a desert island ? 797. How does Caroline reply to 

this question ? 798. What question does Mrs B. ask Caroline 

concerning the scarcity of corn in Great Britain a few years before ? 



212 ON VALUE AND PRICE. 

Caroline. No, not positively a small quantity, but a 
smaller quantity than v^^as required to supply the whole 
of the population of the country with bread. 

Mrs B. Plenty and scarcity are therefore relative 
terms : a scarcity neither implies a small quantity, nor 
plenty a large one ; but the first implies an insufficiency, 
or less than is wanted ; the last as much, or perhaps 
more than is required. When there is plenty, the sup- 
ply of the commodity being at least equal to the demand, 
every one who can pay the cost of its production will 
be able to purchase it. If, on the contrary, the commo- 
dity is scarce, some of these must go without it, and the 
apprehension of this privation produces competition 
amongst those who are desirous of buying the commodity, 
and this raises its value above the cost of production. 

Caroline, This then is the cause of the rise in the 
price of provisions in a besieged town ? 

Mrs B. Yes; or during a famine, or in any case of 
scarcity. Whenever on the contrary, the supply exceeds 
the demand, the price will fall below the natural value 
of the commodity. 

You see, ihereTore, that the natural value and ex- 
changeable value do not always coincide. 

The exchangeable value consists of the natural value, 
subject either to augmentation or duninution ; in propor- 
tion as the commodity is scarce or plentiful. 

Caroline. When you say that the supply exceeds 
the demand, you do not, I suppose, mean that there is 
more of the article than the whole of the population can 
consume or use ; but more than can be consumed by 
those who can afford to pay its natural ^ric^ ? 

799. What was Caroline's reply ? 800. What does Mrs B. 

say of the meaning of the terms plenty and scarcity ? 801. How 

will be the price, when the supply exceeds the demand of the com- 
modity ? 802. Of what does the exchangeable value of an arti- 
cle consist ? 803. What is meant when it is said the supply of 

an article exceeds the demand ? 



ON VALUE AND PRICE ^ 2lS 

Mrs B, Certainly. Those, therefore, who have 
the commodity to dispose of, rather than allow a surplus 
to be left unsold, Will lower its price, so as to render it 
attainable to a class of people who could not otherwise 
afford to purchase it. Hence the demand is increased, 
and becomes by degrees proportioned to the redundant 
supply. 

To illustrate this let us suppose that, by the breaking 
out of a continental war, our foreign trade sliould meet 
with such obstructions, that great part of the manufac- 
tured goods we had prepared for exportation will re- 
main at iiome and overstock the market. The supply 
in this case exceeding the demand, the goods will fall 
in price below their natural value, in order to attract a 
greater number of purchasers ; the consumption will 
thus be increased, but the manufacturers and dealers, 
having been obliged to sell the goods for less than they 
cost to produce, will be losers instead of gainers by their 
industry. 

Caroline. I recollect that calicoes and English mus- 
lins were much cheaper during the last war than they are 
at present ; and the shopkeepers then said that at the 
price at which they sold them, they did not pay for the 
workmanship independently of the materials. 

Mrs B. The cheapness of these goods, although it 
arose from plenty, so far from being a sign of prosperity, 
entailed ruin on the manufacturers and their laborers. 

Caroline. But you observed that if the price of a 
commodity would not defray nil the expenses of rent, 
profit and wages, ii would not be produced ^ 

804. How does the demand become proportioned to the redun- 
dant supply ? 805. What illustration does Mrs B. give ? 306. 

What case does Caroline give in the confirmation of Mrs B.'s state- 
ment ? 807. What does Mrs B. say of the cheapness of those 



214 ON VALUE AND PRICE. 

Mrs B. In the case we have alluded to, the fall in 
price did not take place till after the production of the 
commodities; and the expense of labor having been al- 
ready bestowed on them, it is better to sell them at any 
price than to lose entirely their value. But the manu- 
facturers would in future take care to fabricate a smaller 
quantity, in consequence of which, many of their labor- 
ers would be deprived of work, and part of their capital 
be thrown out of employ. 

Plenty and cheapness are really advantrgeous only 
when they arise from a diminution of the cost of produc- 
tion. Thus when the use of any new machinery, or 
other improvement in the process of labor, enables far- 
mers or manufacturers to produce commodities at less 
expense, the reduction of price is beneficial both to the 
producer and the consumer; to the former, because 
cheapness increases the number of purchasers ; to the 
latter, because he obtains the commodity at less expense. 

Caroline. But when nature gives us a superabundant 
supply of corn, the fall in price it occasions is not I sup- 
pose attended with disadvantage? 

Mrs B. No, not in general; because the farmer, if 
not a gainer, is at least usually repaid, by the abundance j 
of his crops, for the reduction of price ; but if (from m 
whatever cause) he should be under the necessity of 
selling below the cost of production, the low price is no 
longer a benefit; for the evil arising from the check 
given to industry far surpasses the immediate advantage 
of cheapness of corn. The farmers and their laborers 

80S. It has been said if the price of a commodity would not pay 
the expense of rent, profit, and wages, it would not be produced — 

what reply does Mrs B. make to this ? 809 What precaution 

would the manufacturers take for the future ? 810. When are 

plenty and cheapness really advantageous ? 811. What illustra- 
tion is given of this ? 812. Caroline asks, if the fall in price is 

attended with disadvantage when there is an unusually large crop of 
com—what is Mrs B.'s reply ? 



ON VALUE AND PRICE. 215 

would be the first sufferers ; but it is probable that, in 
the end, the whole community would severely feel the 
effects the following season. 

Caroline. True; for farmers would grow cautious, 
and cultivate less wheat, in order that it might not sell 
below its natural value 5 and whilst they would be endea- 
voring exactly to proportion the supply to the demand, 
the season might chance to be less productive than usual 
so as to occasion a scarcity of corn, which would be fol- 
lowed by a rise in the price of bread above the ex- 
pense of its production. 

' Mrs B. Thus, you see, when the supply equals the 
demand, the commodity is sold for its natural value, the 
producer making just the usual rate of profit. If the 
supply exceed the demand, it is sold below that value, 
the competition of producers or dealers, to dispose of 
their goods, lowering tlie price. If the supply is less 
than the demand, the competition of purchasers raises 
the price of the commodity above its natural value, and 
the dealers make extraordinary profits. 

Caroline. It must then be the interest of the farmer 
thai corn should sell above its natural value; and the in- 
terest of the people that it should sell below it ? 

Mrs B. If we extend our views beyond the present 
moment, it will appear that the interest of the producer 
and consumer of any commodity are the same ; and that 
it is for the advantage of both diat the price and natural 
value should coincide. If the consumer pay less for a 
commodity than its cost of production, the producers 

813. Who would be the suffei-ers ?- 814. How does Caro- 
line suppose the whole community might suffer from such an event .-' 
815. What is Mrs B.'s remark, when the supply equals the de- 
mand — when it exceeds the demand— and when it is less than the 
demand ? 816. What does Caroline say would be for the inte- 
rest of the farmer; and what for the interest of the people } 817. 

But what does Mrs B say will be the fact, if we take a prospective 
view of the subject ? 



216 ON VALUE AND PRICE. 

will take care to diminish the quantity in future, in order 
that competition may raise the price ; for they could not, 
without exposing themselves to ruin, continue to supply 
the public with a commodity which did not repay them. 
If, on the other hand, the consumers pay more for an ar- 
ticle than its natural value, the producers will be encou- 
raged by their great profits to increase the supply, and 
the price will consequently fall until it is reduced to the 
natural value. 

Caroline. 1 do not understand why the producers af 
a commodity should increase the supply, if the conse- 
quence is to lessen their profits ? 

Mrs B. We are arguing under the supposition that 
competition is free and open, and in that case, you know, 
capital will immediately flow towards any branch of in- 
dustry that affords extraordinary profits. If, therefore, 
the original producers of the profitable commodity did 
not increase the supply, they would soon meet with com- 
petitors, which would compel them to lower their price 
without increasing their sale. 

" Price," Mr Buchanan observes with great happi- 
ness of expression, "is the nicely poised balance with 
which nature weighs and distributes to her children their 
respective shares of her gifts, to prevent waste, and make 
them last out till reproduced." 

We have dwelt a long lime upon the subject of value; 
and we may now conclude, that though a fluctuation in 
the exchangeable value of commodities may be occasion- 
ed by various circumstances, it will seldom deviate much 
from the natural value, to which (when the employment 



818. How does she show this to be true ? 819. Caroline asks^ 

wh}' the producers of a commodity should increase the supply, if 
the consequence is to lessen their profits — How does Mrs B. answer 

this question ? 820. What does Buchanan say price is ? 821. 

Does the exchangeable value of commodities usually vary much 
from the natural value ? 



ON MONEY. 217 

of capital is left open) the exchangeable value will always 
tend to approximate. 



CONVERSATION XVf. 

ON MONEY. 

Of the use of money as a medium of exchange. — Of coin- 
ing. — ■Use of money as a standard of value. — Of the 
variation of the exchangeahle value of Gold and Sil- 
ver. — In what manner it affects the price of commo- 
dities. -Of nominal and real cheapness. — What classes 
of people are affected by the variation in the value of 
Gold and Silver. — How far money constitutes a 
part of the ivealth of a country. — Of the exportation 
of money. — Of the means by which the value of the 
precious metals equalises itself in all parts of the 
civilized world, 

MRS B. 

Having obtained some knowledge of th ena ture of 
value, we may now proceed to examine the use of 
money. 

Without this general medium of exchange, trade 
could never have made any considerable progress 5 for 
as the subdivisions of labor increased, insuperable diffi- 
culties would be experienced in the adjustment of ac- 
counts. The butcher perhaps would want bread, at a 
time that the baker did not want meat ; or they might 
each be desirous of exchanging their respective commo- 
dities, but these might not be of equal value. 

Caroline. It w^ould be very difficult, I believe, at 

i 822. What 'n the subject of the sixteenth conversation ? 823. 

' Why is money necessary ? 

19 < 



218 ON MONEY. 

any time to make such reckonings exactly balance each 
other. 

Mrs B. In order to avoid this inconvenience, it be- 
came necessary for every man to be provided with a 
commodity which would be willingly taken at all times 
in exchange for goods. Hence arose that useful repre- 
sentative of commodities, money, which, being exclu- 
sively appropriated to exchanges, every one was ready 
either to receive or to part with for that purpose. 

Caroline. When the baker did not want meat he 
would take the butcher's money in exchange for his 
bread, because that money would enable him to obtain 
from others what he did want. 

Mrs B. Various commodities have been employed 
to answer the purpose of money, Mr Salt, in his Tra- 
vels in Abyssinia, informs us, that wedges of salt are 
used in that country for small currency, coined money 
being extremely scarce. A wedge of rock-salt, weigh- 
ing between two and three pounds, was estimated at 
l-30ihofa dollar. 

Caroline. How extremely inconvenient such a bulky 
article must be as a substitute for money ; the carriage 
of it to any distance would cost almost as much as the 
salt was worth. 

Mrs B, A commodity of this nature could be used 
for the purpose of money in those countries only where 
very few mercantile transactions take place, and where 
labor is very cheap. Tobacco, shells, and a great 
variety of other articles, have been used at different 
times, and in different countries, as a medium of ex- 



824. To what is money exclusively devoted ? -825. Have 

various commodities been used for money?- 826. What does 

Mr Salt say is used in Abyssinia ? 827. Why would salt be in- 
convenient for such a use ? 828. Where could a commodity 

of such a nature be used ? 829. What other articles have been 

used ? 



ON MONEY. 219 

change ; but uotWng has ever been found to answer this 
end so well as the metals. They are the least perish- 
able of all commodities ; they are susceptible, by the 
process of fusion, of being divided into any number of 
parts without loss, and being the heaviest, they are the 
least bulky of all bodies. All these properties render 
them peculiarly appropriate for the purposes of com- 
merce and circulation. 

Caroline. The use of metals as money must be very 
ancient, for mention is made in history of the iron coin 
of the Greeks, and the copper coins of the Romans. 

Mrs B. Nor are gold and silver coins of modern 
date ; but they were scarce before the discovery of the 
American mines. The first gold coins were struck at 
Rome, about 200 years before Christ. Those of silver 
about 65 years earlier. Previous to that period the as, 
which was of copper, was the only coin in common use. 

Caroline. It is said in the Bible that Abraham gave 
400 shekels of silver for the purchase of the field of 
Machpelah, to bury Sarah in. Was that, do you sup- 
pose, coined money ? 

Mrs B. No ; I believe there was no coined money 
of so ancient a date as the time of Abraham. The 
metals were originally used for the purpose of money in 
bars ; and you may recollect that Abrahana weighed 
the silver for the purchase : which would have been un- 
necessary had it been coined. Before the invention of 
coining, the use of the metals as a medium of exchange 
was attended with great inconvenience *, it being neces- 



830. Why are the metals preferable to all other articles for mo- 
ney ? 831. When were the first gold coins struck? 832. 

When were silver ones first struck ? 833. What does Caroline 

mention of the use of money in the time of Abraham ?— — 834. 
Why does Mrs B. suppose the 400 shekels mentioned by Caroline 

were not coined money ? 835. How were metals originally used 

for money ? 836. What was the inconvenience of this ? 



220 ON MONEY. 

sary not only to weigh, but also to assay the metal, to 
ascertain both its quantity and its degree of purity. 

The invention of coining superseded this inconve- 
nience ; for coining money is affixing to a piece of 
metal a particular stamp or impression, which declares 
that it is of a certain weight and quality. Thus the im- 
pression on a guinea signifies that it is a piece of gold of 
a certain fineness, weighing 107 grains nearly. 

Caroline. Money must also be of great use in 
fixing the value of commodities; before its introduction 
the butcher and the baker might dispute which was 
worth most, the joint of meat or the loaf of bread which 
they wished to exchange, 

Mrs B. Yes, money became useful not only as a 
medium of exchange, but also as a common measure of 
value. You will learn hereafter that it is not, any more 
than labor, a very accurate measure, when the values of 
one period are compared with the values of another dis- 
tant period ; but for the common purposes of traffic it 
answers sufficiently well. 

Previous to the invention of money, men were much 
at a loss how to estimate the value of their property. In 
order to express that value'lhey were necessarily obliged 
to compare it to something else, and having no settled 
standard, they would naturally choose objects of known 
and established value. Accordingly we read both in 
Scripture and in the ancient poets, of a man's property 
being worth so many oxen and so many flocks and herds. 
Dr Clarke informs us, that even at the present day the 
Calmuc Tartars reckon the value of a coat of mail from 



837. What is the advantage of coinina; metals ? 838. Is mo- 
ney an accurate nieasm-e of the value of commodities in different 

and distant periods? 839. Before the invention of money how 

did men express the value of their propeily ? 840. What facts 

relating to this subject are mentioned in Scripture? 841. What 

does Dr Clarke observe of the Calmuc Tartars ? 



ON MONEY. 221 

six to eight, and up to the value of fifty horses. In 
civilized countries every one eslinfiates his capital by the 
quantity of money it is worth ; he does not really pos- 
sess the sum in money, but his property, whatever be 
its nature or kind, is equivalent to such a sum of money. 

Caroline, For instance, a man who is worth a capi- 
tal of 20,000/. may perhaps not be possessed of 20/. in 
money ; but his property, whether land or commodities, 
if sold, would bring him 20,000/. 

When gold is brought into this country, pray how is 
it paid for ? Something must be given in exchange for 
it ; and yet that something cannot be money ? 

Mrs B. Certainly not. A bullion merchant would 
derive no advantage from a trade in which he would be 
employed in exchanging a certain weight of gold and 
silver in one country, for a similar weight of gold and 
silver in another country, he would lose not only all the 
profits of trade, but the expenses of the freight, &z;c. ; so 
that in fact he would be exchanging 100/. for 90/. or 
95/. 

We pay for gold and silver in woollen cloths, hard- 
ware, calicoes, and linens, and a variety of other com- 
modities. 

Caroline. Then we purchase gold with goods just as 
we purchase goods with gold. 

Mrs B. Exactly 5 those who take our goods in 
exchange for gold bullion, buy goods with gold ; only as 
the g^old is not coined, it may rather be called an ex- 
change of commodities than a purchase. 

Caroline, And if the mines should prove less pro- 
ductive than usual, or any circumstance should render 
gold scarce, and thus raise its exchangeable value, we 

842. What is done in civilized countries ? 848. With what 

do the English obtain their money ? 844. In obtaining gold why 

would Mrs B. call it an exchange of commodities rather than a 
purchase ? 

19* 



222 ON MONEY. 

must export a greater quantity of goods to exchange for 
the same quantity of gold ? 

Mrs B. Undoubtedly. The natural value of gold 
bullion, like that of any other commodity, may be esti- 
mated by the rent, profit, and labor bestowed upon it ; 
and its exchangeable value fluctuates according to the 
proportion of the supply to the demand. This fluctua- 
tion, however, can be discovered only by the greater or 
smaller quantity of goods for which the same quantity of 
gold will exchange. For as gold and silver m'ay be 
bought with any kind of goods, they are not susceptible 
of a standard of value like that of other commodities 
which is estimated in one particular article — money. 

Caroline. As gold and silver are the standard of 
value of all other commodities, all other commodities, I 
conceive, must be affected by an alteration in the ex- 
changeable value of gold and silver.^ 

Mrs B. And this is the reason why money is not an 
accurate standard of the value of commodities. For 
if money by its plenty diminish in value, it enhances the 
price of commodities, and renders them dearer. Whilst 
if money by its scarcity increase in value, it lowers the 
price of commodities, that is to say, their exchangeable 
value estimated in money, and renders them che'aper. 

To illustrate this by an example ; let us suppose the 
supply of bread to be exactly equal to the demand, 
so that its exchangeable and natural value should coin- 
cide ; in what manner would a scarcity of money affect 
it? • 

Caroline. A deficiency of any article raises its ex- 

845. How may the natural value of gold bullion be estimated ? 

. 846. How can the fluctuation in natural value of gold bullion 

be discovered ? 847. Is gold and silver susceptible of a standard 

in value ? -848. Why is not money an accurate standard of the 

value of commodities ? 849. How does the plenty or scarcity of 

money affect the value of commodities .' 



ON MONEY. 223 

changeable value, and consequently its price, above its 
natural value : thus a deficiency of gold or silver would 
make a smaller quantity exchange for the same quantity 
of goods as before ; and therefore a loaf of bread would 
sell for less money, or, in other words v/ould be cheaper. 

Mrs B. Yes ; and not only bread, but meat, 
clothes, furniture, houses, in short everything would be 
cheaper, in consequence of the scarcity of the precious 
metals. 

Caroline. It would appear then that a scarcity qf 
money is advantageous to a country by rendering things 
cheap. 

Mrs B. When the cheapness of commodities arises 
from that plenty which results from a reduction of the 
cost of production, it is very advantageous ; but not 
when it proceeds from a scarcity of money. In the lat- 
ter case, the supply not being increased, commodities are 
cheaper, without any alteration in their general ex- 
changeable value. They may, therefore, be considered 
rather as nominally than really cheaper. If," for instance, 
a loaf of bread should sell for a penny, though there 
should not be a single loaf more in the country than 
when it sold for a shilling, the cheapness would not make 
bread more plentiful. 

Caroline. But if the price of bread were so low as 
a penny, though the supply should not be-increased, the 
laboring classes would increase their consumption of it 
so considerably as to produce a scarcity, if not a famine, 
before the next harvest. This nominal, or I would call 
li false, cheapness, must therefore be prejudicial instead 
of being beneficial to a country. 

.850. How is tl\is illustrated ? 851. When is the cheapness 

of commodities advantageous? 852. When is it hurtful? 

853. In what respect are commodities cheaper from the scarcity of 

money ? 854. What erroneous conclusion does Caroline draw 

from this nominal cheapness in relation to the poor ? 



224 ON MONEY. 

M's B. The consequence you have drawn from It 
is erroneous; for the laboring classes would not be able 
to purchase a greater quantity of bread than usual, ow- 
ing to the scarcity of money. The wages of labor would 
not be exempted from the general fall in price which this 
scarcity would produce : the laborers as well as the 
bread they eat, would be paid in pence instead of shil- 
lings, and their power of purchasing bread would neither 
be increased nor diminished. 

Caroline, True ; I did not consider that. I sup- 
pose then that if the contrary case occurred, that is, if 
the quantity of money were considerably augmented, 
either by the discovery of a mine in the country, or by 
any other means, a general rise in the price of com- 
modities would be the consequence. 

Mrs B. Undoubtedly ; but without producing any 
scarcity. Therefore though commodities would rise in 
price, their value would not be increased, and the com- 
modities being the same in quantity, the public would 
be equally well supplied ; but as money fell or became 
depreciated in value from its excess, fewer commodities 
would be given in exchange for the same sum ; of 
more money must be paid for the same commodity. A 
loaf of bread might cost two shillings instead of one, but 
as the wages of labor would at the same time be doubled, 
the laborer would suffer no privation from the increase 
of price. You now see the propriety of making the dis- 
tinction between the value and \\\q price of a com- 
modity. 

It is very possible for the price of a commodity to 
rise, whilst its value foils. A loaf of bread may rise in 



855. Wherein does her error consist ? 856. What does Ca- 
roline then suppose would be the case if money should become very 

plenty ? 857. In the case of the loaf of bread which costs the 

laborer two shillings instead of one, wherein does he suffer no loss ? 

858. Does the price of an article ever rise whilst it falls in 

value ? 



ON MONEY. 225 

price from one to two shillings ; but money may be so 
depreciated by excess that two shillings may not pro- 
cure so much meat, butter, and cheese as one shilling 
did before ; therefore a loaf of bread would no longer 
exchange for so much of those commodities, and its ex- 
changeable value compared with other things generally 
would have fallen ; while i[s price or exchangeable value 
estimated in money only would have risen. 

Caroline. And when the price alters, how can we 
distinguish whether it is the goods or the money which 
changes in value ? 

Mrs B. There is no point so difficult to ascertain as 
a variation of value, because we have no fixed standard 
measure of value ; neither nature nor art furnishes us 
with a commodity whose value is incapable of change ; 
and such alone would afford us an accurate standard of 
value. 

Caroline. How useful such a commodity would be ; 
for we cannot estimate the value of anything without 
comparing it with the value of something else ; and if 
that something else is liable to variation, it is but of little 
assistance to us : it is supporting the earth by the ele- 
phant, and the elephant by the tortoise ; but we still re- 
main in the same dilemma. When a man says he is 
worth 500 acres of land, we can form scarcely any 
judgment of his wealth unless he tells us what the acres 
are worth ; his land may be situated in the most fruitful 
parts of England, or it may be in the wilds of America, 
or the deserts of Arabia ; and if he values his land in 
money, and says my acres are worth, or would sell for 
1000/., we can form some notion of their real value, but 



859. What illustration of this is given? 860. When the 

price alters how can it be ascertained whether it is the goods or the 

money which changes in value ? 861. What case does Caroline 

mention of a landed proprietor to show the difficulty in determining 
the real value of different commodities ? 



226 'ON MONEY. 

not an accurate one ; for we do not know what is the 
real value of the money, whether it is plentiful or scarce, 
cheap or dear ; nor can we ever learn it unless we had 
some invariable standard by which to measure it. 

JVLrs B. Now supposing money to be depreciated in 
value 25 per cent, and that the expense of manufac- 
turing a piece of muslin, from some improvement in the 
process, fell from four to three shillings a yard, at what 
price would the rnuslin sell? 

Caroline. It would retain its original price of four 
shillings, though it would really be cheaper ; for the 
diminution of the value of money would exactly coun-, 
terbalance the diminution of the cost of production of 
the muslin. 

Mrs B. Very well. And if on the contrary, 
money should become scarce at the same time as the 
cost of production of a commodity diminished, then 
these two causes, acting in conjunction instead of oppo- 
sition, the commodity would be both nominally and really 
cheaper. 

Caroline. The muslin in that case would fall from 
four to two shillings a yard. 

Mrs B. In order sull further to reduce the price of 
the muslin^ we may suppose the supply to exceed the 
demand, so as to oblige the manufacturer to sell it be- 
low its cost of production ; and tlius the price might fall 
so low as one shilling or even sixpence a yard. 

But of all these reductions of price, that which pro- 
ceeds from a diminished cost of production is the only 

862. What question does Mrs B. ask concerning the price of a 
yard of muslin, the cost of manufacturing which has lessened, and at 

a time when money is depreciated in value ? 863. Why would 

the money sell for its original price ? 864. What would be the 

fact, as to price, if the cost of production should be diminished, and 

at the same time money should become scarce ? 865. In what 

way does Mrs B. suppose the price of the muslin might fall to a shil- 
ling, or even sixpence a yard ? 



ON MONEY. 227 

one from which general advantage is derived. That 
arising from the depreciation of money producing merely 
a nominal cheapness ; and that which resuhs from an 
excess of supply being decidedly an evil, inasmuch as it 
creates distress and discourages industry. 

Caroline. It appears then from what you have said, 
that an increase or diminution of money in a country 
does not really affect the pecuniary circumstances of 
any one ? 

Mrs B. I beg your pardon ', all classes of men are 
temporarily affected when the change is abrupt ; be- 
cause the due level is not immediately ascertained, and 
until that takes place the pressure falls unequally. But 
independently of this, there are many classes of people 
who would be very sensibly and permanently injured by 
an alteration in the exchangeable value of money. 

Let us suppose, for instance, that the proprietor of a 
field lets it for a long lease at a rent of 20/. a year ; and 
that some years afterwards, money having risen in value, 
and he being in want of hay for his horses, purchases 
the crop of hay for \bl. In this case the landlord will 
continue to receive 20Z. a year for the rent, and yet 
pay but 15Z. for the produce, so that the farmer will lose 
5Z. besides the profits of his capital. Is not this a very 
serious injury ^ 

Caroline. No doubt ; and this would be the case 
with all leases; for it is immaterial to whom the farmer 
sells his crops ; if the market price has fallen he must 
be a loser. 

Mrs B. Yes. Were money raised to double its 
former value, the rent would purchase double the quan- 



866. From what reduction of price only does a general advan- 
tage result ? 867. What evil may result from a sudden increase 

or diminution of money ? 868. What supposition does Mrs B. 

make of a landed proprietor to show the evil that may come from 

isuch a change in the condition of money ? 869. How would it 

be if the value of money were raised to double what it formerly was > 



228 ON MONEY. 

tity of commodities that it did before; for lOOZ. in mo- 
ney would exchange for a quantity of goods which was 
reckoned worth 2001. previous to the alteration ; so that 
rents though nominally the same, would in reality be 
doubled, and it would be so much unjustly taken out 'of 
the pocket of the tenant to put into that of the landlord. 

Caroline. This evil, however, admits of a remedy 
when a new lease is made ? 

Mrs B. True ; but should the old one have several 
years to run the farmer may be ruined first ; and though 
it is true it does not violate any law, it is a manifest in- 
fraction on the security of property, which we have ob- 
served to be the foundation of all wealth, and the strong- 
est motive for its accumulation. There is no more 
active and steady stimulus to industry than the certainty 
of reaping the fruits of our labor. 

Caroline. Then I suppose that when money is de- 
preciated in value in consequence of being more plenti- 
ful, the case would be reversed ; the farmer would be 
benefited and the landlord would be the loser : for the 
rent would not be really worth so much as it was be- 
fore. 

Mrs B. Undoubtedly. Another class of people 
who are materially affected by an alteration in the value 
of money, are the unproductive laborers. Their pay is 
generally a regular stipend, not liable to the same varia- 
tion as the wages of productive laborers. The pay of 
the army and navy, of all the officers under govern- 
ment, and of the learned professions, is fixed ; those 
persons must therefore sliffer all the evil, or enjoy all 

870. How could this evil be remedied ? 871. But in what 

case might the farmer be ruined ? 872. What is mentioned as 

being a great stimulus to industry ? 873. What change is named 

by Caroline in which the farmer would be benefited and the land- 
lord would be the loser ? 874. What other class of persons is 

materially affected by an alteration in the value of money? 875. 

Why are unproductive laborers affected by this change? 



ON MONEY. 229 

the benefit arising frona an alteration in the value of 
money. 

Caroline, The higher classes of the unproductive 
laborers might be able to support the hardship resulting 
from a depreciation of the value of money ; but how 
can the common sailor or soldier do so ? It is absolutely 
necessary that their pay should enable them to procure 
a suitable subsistence. 

Mrs B, They are usually paid, partly in money and 
partly in provisions and clothing, and are not therefore 
such sufferers by a depreciation of money as they would 
be if paid entirely in currency. It has nevertheless been 
found necessary of late to augment the pay of both army 
and navy. 

Caroline. The value of money has then fallen ^ 

Mrs B, Yes, it has ; but I must defer explaining 
the reason of this fall till our next interview. A third 
class of people who are considerably injured by a de- 
preciation of the value of money, are those who have 
lent money at interest for a long period of time, persons 
who live on annuities, and particularly the stockholders 
in the public funds. Not only is the interest they receive 
depreciated, but also the value of their capital. The in- 
terest they receive for their stock remains nominally the 
same, whatever diminution may have taken place in the 
value of money ; and their income being thus apparent- 
ly stationary, they partake in the general disadvantages 
of the rise of prices, without being enabled to avail them- 
selves of the compensation arising from the greater 
abundance of money. Professional men, and all those 
who receive salaries, have ultimately the remedy of an 

; 

576. How are the lower classes of unproductive laborers in part 
secured against the effects of such a change ?— — 877. Who are a 
third class of persons that are injured by the depreciation in the va- 
lue of money ? 878. Why do they lose ? 879. What relief 

have professional men ? 
20 



230^ ON MONEY. 

increase of pay ; but the stockholder has no resource 5 
his income wastes away, and he perceives his means of 
procuring his accustomed enjoyments gradually diminish, 
without being able to trace the source from whence the 
evil springs ; for as his income remains nominally the 
same, he is not aware of any diminution of wealth. 

Caroline. How very much I have been mistaken in 
my idea of money ! Instead of being the only, or at least 
the principal article which (as I thought) constituted 
wealth ; it seems on the contrary, to be the only one 
which is unworthy of that tide, since it does not contri- 
bute to the riches of a country. An excess of money 
renders other things dear ; a deficiency of it makes them 
cheap; but it appears to me that a country is not one 
atom the richer for all the money it possesses. Money, 
therefore, I think, cannot be called wealth, but merely 
its representative, like the counters at cards ; and its 
chief use seems to consist in its affording us a conveni- 
ent medium of exchange, and a useful, though imperfect 
standard of value. 

Mrs B. Money cannot with justice be compared to 
counters, for it is not, like them, a sign or representative 
of value, but really possesses (or ought to possess) the 
value for which it exchanges. A bank note, which has 
no intrinsic value, is simply a sign of value ; but when you 
purchase goods for a guinea, you give a piece of gold of 
equivalent value in exchange. 

In order to judge whether money forms any part of 
the wealth of a nation, let us refer to our definition of 
wealth. I believe we said that every article, either of 
utility or luxury, constituted wealth. Now I leave you 

880. In what mistake does Caroline acknowledge herself to have 

been? 881. What does she consider the chief use of money ? 

882. What does Mrs B. say of a bank note ? 883. How does 

she say we are to judge whether money forms any part of the wealth 
of a nation ? 



ON MONEY. 231 

to judge whether money, considered either as a niedium 
of exchange, or as a standard of value, is not eminently 
useful ; since by facilitating the circulation of commodi- 
ties it indirectly contributes to their multiplication. 

Caroline. That is true, certainly, with regard to the 
money actually required for circulation ; but should it 
exceed that sum, the surplus would be of no value to us. 

Mrs B. The same might be said of a superfluous 
quantity of any kind of wealth : more tables and chairs, 
or a greater quantity of gowns and coats than are wanted 
would be equally useless, and would equally be depre- 
ciated in value. 

Caroline. But then we could export such commodi- 
ties, and exchange them for goods which we did want. 

Mrs B. And why should we not do the same with 
money? When we have more money than is required 
for the purpose of circulation, we should export it, by 
purchasing foreign goods ; without this resource, a su- 
perfluity of money is perfectly useless, and will no more 
contribute to the production of wealth, than a superflu- 
ous number of mills would contribute to the production 
of flour. 

Caroline. I had always imagined that the more mo- 
ney a country possessed, the more affluent was its con- 
dition. 

Mrs B. And that usually is the case. The error 
lies in mistaking the cause for the effect. A great quan- 
tity of money is necessary to circulate a great quantity of 
commodities. Rich flourishing countries require abun- 
dance of money, and possess the means of obtaining it ; 
but this abundance is the consequence, not the cause of 



884. WJiat comparison is made between a surplus of money and 

other articles of wealth ? 885, To what use may a surplus of 

naoney be converted ? 886. What does Caroline say she had 

always imagined as Xo the condition of a country? 887. Wherein 

lies her mistake ?— — 888. How is it illustrated, that the cause is 
piist^ken for the effect ? 



232 ON MONEY. 

their wealth, which consists in the commodities circulated, 
rather than in the circulating medium. Specie, we have 
just said, constitutes wealth, so far as it is required for 
circulation ; but if a country possesses one guinea more 
than is necessary for that purpose, the wealth which 
purchased that guinea has been thrown away. 

Caroline. Yet what a common observation it is, that 
plenty of money animates the industry of a country, and 
encourages commerce ; and this seems to be proved by 
the miserable and barbarous state of Europe previous 
to the discovery of the American mines. 

Mrs B. The discovery of America was certainly a 
very efhcient cause, in rousing the industry of Europe 
from the state of stagnation into which it was sunk by 
ignorance and barbarism. But had America possessed 
no mines, I doubt whether the advantages we have de- 
rived from our connexion with that country would not 
have been equally great ; we could easily find a substi- 
tute for the specie with which she supplies us, but never 
for the abundance and variety of wealth which she is in- 
cessantly pouring in upon us. The increase of Euro- 
pean comforts, of affluence, of luxury, is attributed to the 
influx of the treasures of the new world^-and with reason ; 
but those treasures are the sugar, the coffee, the indigo, 
the tobacco, the drugs, &cc. which America exports, to 
obtain which we must send her commodities that have 
been produced by the employment of our poor. Gold 
and silver, though they have greatly excited our avarice 
and ambition, have eventually contributed but litde to sti- 
mulate our industry. 

889. What does Caroline say is a common observation, as to the 
plenty of money ?^ — 890. What effect had the discovery of Ame- 
rica on the industry of Europe ? 891. What does Mrs B. sup- 
pose might have been the case as to the comparative condition of 

European prosperity had America possessed no mines ? 892. 

What does she say has been the effect of the Anaericao g9l4 aft4 siU 
ver in Europe ? 



ON MONEY. 233' 

It is not to the multiplication of the precious metals that 
we are indebted for our improved agriculture, our pros- 
perous commerce, and the variety and excellence of our 
manufactures ; nor do 1 believe that it was their scarcity 
which deprived our ancestors of these advantages. It 
was because they were ignorant and barbarous, and that 
we are comparatively enlightened and civilized ; — com- 
paratively I may indeed say, for error is still active in 
retarding the progress of improvement, and this is no- 
where more evident than in the anxiety of governments, 
to prevent the exportation of specie, although it is now 
above thirty years since Adam Smith fully proved the 
impolicy of this prohibition. 

Caroline. If the exportation of specie be prohibited, 
the only use that can be made of a superfluous quantity 
of it, is to melt it down and convert it into bullion. 

Mrs B. But melting the coin is, in this country, 
equally illegal. A superfluous quantity of money, there- 
fore, (were these laws never infringed) would be neces- 
sarily added to the circulation, and depreciate the value 
of the whole. 

How diflJerent is the situation of a country where no 
such prohibitory laws exist ! There no sooner does mo- 
ney accumulate, so as to occasion a depreciation of its 
value, or, in other words, an advance in the price of 
commodities, than the merchants of that country export 
specie, and purchase with it foreign goods ; while at the 
same time foreign merchants send their goods to the 
country where prices have risen, and exchange them, not 
for other goods, which are dear, but for money, which 
is cheap. 

893. To what does Mrs B. ascribe the s^reater prosperity which 
now exists in Great Britain ? — -894. What does she say Adam 

Smith proved more than thirty years ago ? 895. Is the melting 

of coin allowed in England ? 896. What advantages are de- 
scribed to exist where there are no prohibitory laws, in relation to 
nioney ? 

2Q* 



234 ON MONET. 

Caroline, That is to say, they will sell, but not pur- 
chase ? 

Mrs B. Precisely : — ^^it is thus that a country is 
drained of its superfluous specie j as this traffic goes on, 
money rises in value, commodities fall in price, and fo- 
reign merchants again exchange their goods for commo- 
dities of the country, instead of receiving payment for it 
in specie. 

No apprehension need therefore be entertained of ill 
consequences arising either from the melting down or ex- 
porting the coin of the country. This exportation will 
take place secretly whenever there is a superfluity, how- 
ever severe the law may be against it; the only differ- 
ence is, that instead of being carried on in an open and 
regular manner by merchants of respectability, it is 
thrown into the hands of men of despicable character, 
who are tempted by extraordinary profits to engage into 
this illicit traffic. 

Could Spain and Portugal, countries which receive 
all the precious metals imported from America into Eu- 
rope, have carried into effect the absurd restrictive laws, 
by which they attempted to keep their gold and silver 
at home, tliose metals would evidently have become of 
little more value to them than lead and copper. 

If you have understood what 1 have said, you will now 
be able to tell me what effect will be produced in the 
mercantile transactions of a country, which is not shack- 
led by restrictive laws, when a scarcity of money pro- 
duces a fall in the price of commodities. 

897. Ts any lasting evil to be apprehended from the melting 

down, or exportation of specie ? 898. Does exportation ever 

take place if there are prohibitory laws ? 899. What is the dif- 
ference as to its being done, whether under the sanction of the laws 

or secretly ?^ 900. What would be the effect, in those countries, 

were Spain and Portugal able to carry into effect their restrictive 
laws in regard to specie ? 



ON MONEY. 235 

Caroline. In that case the very reverse will happen 
of what we before observed. Foreign merchants will 
come and buy goods, and instead of offering merchan- 
dise in exchange, will bring money in payment ; for 
they will be willing to make purchases, but not sales at a 
cheap market. 

Mrs B. It is thus that the value of gold and silver 
equalises itself in all parts of the civilized world ; wher- 
ever there is a deficiency, it flows in from every quarter ; 
and wherever there is a redundancy, the tide sets in an 
opposite direction. It is the regular diffusion of the pre- 
cious metals, and their constant tendency to an equality 
of value, which renders them so peculiarly calculated for 
a general standard. Were money as liable to variation 
of value as the commodities for which it serves as a me- 
dium of exchange, it would be totally unfit for a stan- 
dard. 



CONVERSATION XVII. 

SUBJECT OF MONEY CONTINUED. 

Of the depreciation of Gold and Silver. — Of the adul- 
teration and depreciation of coined money. — Of 
banks. — Of paper money. — Effects of paper money 
when not payable in specie on demand. — Of the pro- 
portion of currency to the commodities to be circu- 
lated by it. 



901. What does Caroline say will take place in the mercantile 
transactions of a country, which is not shackled by restrictive laws, 
when a scarcity of money produces a fall in the price of commodi- 
ties ? 902. How do silver and gold equalise themselves ? r- 

903. What renders them so peculiarly calculated for a general 
standard ? 



236 ON MONET. 



CAROLINE. 



I HAVE been reflecting much upon the subject ofour last 
conversation, Mrs B. ; and it has occurred to me that 
though there may be no permanent excess and depre- 
ciation of specie in any particular country, yet it must 
gradually decrease in value throughout the world : for 
money is very little liable to wear ; a great quantity of 
the precious metals is annually extracted from the mines, 
and though a considerable portion of it may be converted 
into plate and jewellery, yet the greater part, I suppose, 
goes to the mint to be coined, and this additional quan- 
tity must produce a depreciation of value ? 

Mrs B. An increase of supply will not occasion de- 
preciation of value, if there should be at the same time a 
proportional increase of demand, and we must recollect 
that the consumable produce of the earth increases as 
3vell as that of the mines — the commodities to be circu- 
lated as well as the medium of circulation ; and it is not 
the actual quantity of money, but the proportion which 
it bears to the quantity of commodities for which it is to 
serve as a medium of exchange, that regulates the price 
of those commodities. 

Let us suppose the price of a loaf of bread to be one 
shilling; and say, if 1000 more loaves of bread be pro- 
duced every year by agriculture, and such an additional 
number of shillings be obtained from the mines as will 
be necessary to circulate them, the price of a loaf will 
then remain the same, and the value of money, will not 
by this additional quantity of specie, be depreciated. 

Caroline, But, Mrs B., you do not consider that 



904. What reason does Caroline give for supposing that there 
will be throughout the world a gradual decrease in value of money ? 

905. What will prevent this decrease ?— ^906. If not the 

actual qiantity of money what does regulate the price of exchange^ 
able commodities ? 907. What illustration is given of this ? 



ON MONEY. 237 

when the thousand additional loaves are eaten, the addi- 
tional shillings will remain. 

Mrs B. The greater part of these loaves will be 
eaten by those who will not only reproduce them, but 
probably increase the number the following year. 

^Caroline. In that case it would be very possible that 
the progress of agriculture and manufactures should 
keep pace with, or even precede that of the mines. 

Mrs B. If the quantity of the precious metals an- 
nually extracted from the mines be exactly what is re- 
quired for the arts, and for the additional specie neces- 
sary to circulate the increasing produce of the land, there 
will be no change in the value of money, and commodi- 
ties will continue to be bought and sold at their former 
prices. If less gold and silver be extracted than is re- 
quisite for these purposes, goods will fall in price ; and 
if, on the contrary, a greater quantity be produced, goods 
will rise in price, the fluctuations in the price of commo- 
dities gradually and constantly conforming to the varia- 
tions of the scale by which their value is measured. 

Dr Adam Smith was of opinion that for many years 
past the supply of gold and silver did not exceed the de- 
mand ; but several later writers conceive that he was 
mistaken on this point. I am very far from being a 
competent judge of such a question, but I confess that I 
feel inclined to favor the opinion of a general deprecia- 
tion. 

Previous to the discovery of America the exchangea- 
ble value of money was certainly much greater than it 



908. Caroline says, that when the 1000 additional loaves are 
eaten, the additional shillings will remain — What reply does Mrs B. 

make ? 909. Under what circumstances will the value of money 

remain the same ? 910. Under what circumstances, so far as 

the quantity of gold and silver is considered, will goods fall in price ; 

and under what ones will they rise ic price? 911. What was 

Adam Smith's opinion as to the existing quantity of gold and silver ? 
912. What is said of the exchangeable value of money previous tq 
the discovery of America ? 



238 ON MONEY. 

has been since that period. Some notion may oe form- 
ed of the difference of the value of money in ancient 
and in modern times from the amount of the revenue 
which Xerxes king of Persia derived from his wealthy 
and extensive empire, and which enabled him to main- 
tain his mighty fleets and armies i it is said in histor3^to 
have amounted to only three millions sterling. 

Cm^oUne. The prodigality and extravagance of the 
Romans was then in fact still greater than it appears, 
since the immense sums they expended upon luxuries 
were then more valuable than they would be at the pre- 
sent times. 

Mrs B. As the wealth of the Romans arose in a 
great measure from the spoliation of the countries they 
conquered, gold and silver formed an essential part of 
their plunder; specie, therefore, might possibly be of 
less value there than in any other parts of the world at 
the same period. 

Independently, however, of the increase of quantity 
which produces a depreciation in the value of the pre- 
cious metals themselves, there are causes quite foreign 
to this, which have considerable effect on the value of 
the money into which they have been coined. One of 
these is the adulteration of the coin. A pound sterling, 
or twenty shillings, originally weighed a pound of silver ; 
hence its denomination. But sovereigns, in making new 
coinages, frequently found it convenient to adulterate the 
metal by mixing it with alloy. It was a means of in- 
creasing the value of their treasures, by paying their 
debts with a much less quantity of the precious metals. 



913. What reference is made to Xerxes in illustration of the 

subject ? 914. What does Caroline say of the prodigality and 

extravagance of the Romans ? 915. Why does Mrs B. think Ca- 
roline's opinion may be incorrect ? 916. Whence did a pound 

sterling receive its denomination ? 917. Why has the metal 

been adulterated ? 



ON MONEY. 339 

and thus defrauding their creditor-subjects, who in the 
first instance were not aware of the change. 

In the year 1351, Edward the Fourth, distressed by 
the debts he had incurred in his chimerical attempts to 
conquer France, adopted this mode of paying his credi- 
tors with less money than he borrowed of them. He 
ordered a pound of silver to be coined into 266, instead 
of 240 pennies. Having experienced the beneficial ef- 
fects of this expedient, he soon after coined 270 pennies 
out of the same pound. By this imposition, not only the 
creditors of the crown, but all other creditors were de- 
frauded of about a tenth of their property ; being com- 
pelled to receive in payment money of less value than 
that they had lent. Considerable inconvenience was also 
experienced from the alteration in the standard of value ; 
as soon as it was discovered, it produced a general rise 
in the price of commodities, and the poor were greatly 
distressed by the enhancement of prices of the necessa- 
ries of life. 

Caroline. But did not wages rise in the same pro- 
portion ? 

Mrs B. Eventually they did, no doubt; but after 
such a revolution in prices as an event of this nature pro- 
duces, a length of time is required to restore the due 
level; and the rich always resist the rise of wages as 
long as they can. In the instance I have mentioned it 
does not appear that the laboring class made any effort 
to obtain a compensation by a rise of wages, until a 
dreadful pestilence, which originated in the east, extended 
its ravages to England, and carried off the greater part 
of the lower classes. The survivors then took advan- 



918. What took place in the year 1351 in relation to this subject ? 

919. Of how much were creditors thus defrauded ? 920. 

When the cheat was discovered what change in the price of commo- 
dities took place ?— — 921. V/hy did not a rise in wages immediately 
take place ? 922. What finally caused them to rise ? 



240 ON MONEY. 

tage of the scarcity of hands to raise their terms : but the 
king, instead of allowing the remedy to pursue its natu- 
ral course, considered this attempt of the laborers to raise 
their wages as an unwarrantable exaction ; and in order 
to prevent it, enacted the statute of laborers. This sta- 
tute ordained that laborers should receive no more 
than the wages which were paid previous to the adulte- 
ration of the coin. 

It would be difficult to conceive a law more calculated 
to repress the efforts of industry. But Edward, urged 
by the weight of his accumulated debts, continued to de- 
preciate the value of the coin; endeavoring to conceal 
the fraud by the introduction of a new silver coin called 
2i groat, but in value only 3 3-4d. : and in 1358 he made 
75 groats, or 300 pennies, out of a pound of silver. 

Caroline. What a prodigious depreciation in the 
course of so short a period of time ! and have similar 
expedients been resorted to by successive sovereigns ? 

Mrs B. Yes ; so repeatedly that 20 shillings, or a 
pound sterling, instead of containing, as formerly, a pound 
of silver, now weighs rather less than four ounces of that 
metal. 

Caroline. But this is but a partial depreciation, which 
affects only the coin of Great Britain. Have other coun- 
tries also adopted so unjust and pernicious a measure? 

Mrs B. It is so tempting an expedient for sovereigns, 
that it has been resorted to in almost all countries where 
money is used. In the time of Charlemagne, the French 
livre weighed a pound, of 12 ounces. Philip the First 
adulterated it with one-third of alloy. Philip ofValois 
practised the same fraud on gold coin, and it has been 



923. What was then done to prevent the rise of wages ?-< — 924. 

Why was Edward led to make this statute ? 925. What is the 

present weight of a pound sterling ? 926. Have other countries 

adulterated their coins ? 927. What was the weight of a French 

livre in the time of Charlemagne ? 928. What two sovereigns 

are mentioned to have adulterated the coins in use ? 



ON MONEY. 241 

repeated by successive sovereigns till the depreciation of 
the French louis is even greater than that of our pound 
sterling, and their livre is now worth not more than ten- 
pence. 

As far back as the tin:ie of the Romans this surrep- 
titious mode of obtaining wealth had been discovered, 
and was practised. The Roman as, which originally 
contained a pound of brass, was in the course of time 
diminished to half an ounce. 

Caroline, But now that the world must be fully 
aware of the imposition, I should think that governments 
would not venture to have recourse to such expedients. 

Mrs B. This country has increased so much in 
wealth, that in the present times less difficulty is expe- 
rienced in raising taxes, and the facility of making loans 
has induced government to give the preference to that 
mode of obtaining money during a time of war, or when- 
ever any remarkable expenses are incurred. 

Of late years a new mode of augmenting the currency 
of the country has been invented ; by substituting for the 
precious metals a more convenient and more economical 
medium of exchange^ under the form of paper money. 

Caroline. Paper money ! What value can there be 
in money made of paper ^ 

Mrs B. None whatever intrinsically, yet it has been 
found to answer most of the purposes of specie. You 
remember that money was first invented to avoid the 
inconvenience of barter. When a commodity is sold for 
money, it is under a confidence, on the part of the seller, 
that he will be able with the money to purchase any 
other commodity of equal value that he may want. It 

929. What is its present value ? 930. What instance of adul- 
teration by the Romans is mentioned? 931. What new mode 

of augmenting the currency of a country has been invented ? 932. 

For what was money invented ? 933. What is the only thing of 

importance in giving value to money ? 

21 



242 ON MONEY. 

is of no consequence to him of what material the money 
be made, provided it have this quality. 

Caroline. True ; but paper can never have that 
quality : who would part with anything of value for a 
bit of paper ? 

Mrs B. Suppose I were to give you a paper con- 
taining my promise to pay you 100/. in money whenever 
you demanded it ; would you not consider the promise 
so formally given, nearly of the same value as the mo- 
ney itself? 

Caroline. Yes ; because I have perfect confidence 
in you ; but a stranger would not. 

J\Irs IB. Suppose that instead of my promise to pay 
you 100/., I should give you a piece of paper containing a 
promise to the same effect of some of the wealthiest and 
best known merchants in London ? 

Caroline. My confidence in the value of such paper 
would be in proportion to the reliance I could place on 
the promise of such merchants. 

Mrs B. Exactly so. Such confidence is the foun- 
dation of all banking establishments, which are in gene- 
ral a partnership of weahhy and respectable merchants, 
in whom the public repose so great a confidence that 
they are willing to take their promissory note, commonly 
called a hank-note, instead of money. 

Caroline. A bank-note then is a written engagement 
or promise, to pay the sum, whatever it be, that is spe- 
cified in the note ? 

Mrs B. It is ; and these notes become current as a 
medium of exchange, having no intrinsic value, they are 
merely the sign or representative of wealth ; but are re- 

934. What is the object of Mrs B. in the question she asks Ca- 
roline about the 100/. note ? 935. What variation does she 

make in the lOOZ. note ? 936. What are]banking establishments ? 

937. What is a bank-note ? 938. Why are they received 

by the public ? 



ON MONEY. 243 

ceived by the public under the persuasion that they will 
be paid in money by the bank, whenever required. 

Caroline. This is indeed an excellent invention ; 
what a saving of expense ! The establishment of a bank 
of paper money appears to me very similar to the disco- 
very of a mine of gold in the country ; or indeed the 
bank has even some advantages over the mine, for it is 
certain of being productive, and yet it is attended with 
much less expense. Is the invention of paper money 
quite of modern date ? 

Mrs B. There is, I believe, no vestige of anything 
of the kind in ancient history ; unless we should consider, 
as such, a species of stamped leather used as money by 
the Carthaginians ; and as they had also coined money, 
it is possible that their stamped leather might be consi- 
dered merely as a sign or representative of real value, 
analogous to our paper money. 

Caroline. The leather was probably a species of 
parchment, the substance commonly used for writing on, 
before the invention of paper, and the impression stamp- 
ed on it might signify the sum of money, which the piece 
of leather was to represent, or pass for. 

Mrs B. These are points upon which, in the im- 
perfect state of our knowledge of Carthaginian currency, 
it would be difficult to determine; it is fortunate, there- 
fore, that they are questions more of curiosity than of 
utility. 

The first bank we are distinctly acquainted with was 
established at Amsterdam in the year 1609 ;* but this 

* It is said, however, that a bank was established at Venice at 
least two centuries before. 

939. To what does Caroline compare a bank? 940. Did 

paper money exist in ancient times? 941. What was therein 

Carthage apparently analogous to our paper money ? 942i 

When and where was the first bank established ? 



244 ON MONEY. 

Institiilion was rather of a different kind from what I 
have been describing. It issued no paper, but received 
the deposit of coined money, an account of which was 
taken in the books of the bank ; and through the medium 
of these books transfers of property were made from one 
individual to another, as occasion required, without the 
money being once removed from the strong chests in 
which it was originally deposited. 

Caroline. There does not seem to be any economy 
in this species of bank ; whilst those that issue bank- 
notes, by the su^bstitution of a cheap circulating medium, 
render that of gold and silver superfluous, and enable it 
to be sent abroad to purchase foreign commodities. 

Mrs B. And, should foreign countries adopt the 
same economical expedient, and send us their superflu- 
ous specie, .....? 

Caroline. True, I did not consider that. If paper 
money were generally adopted, every country would be 
overstocked with specie ; for though the establishment 
of a bank in any one country may force the superfluous 
money into others, this cannot happen if banks are set 
up in every country. They are far therefore from be- 
ing attended with the advantages I at first imagined. 

Mrs B. By issuing paper money, so much is, in 
fact, added to the circulation throughout the civilized 
world ; and inasmuch as it supersedes the use of the 
precious metals, and therefore lessens the demand, it 
must to a certain degree lessen their value. The im- 
mediate eflect of opening a new bank is certainly to drive 
some portion of the specie out of the country in which 

943. What was the plan of it? 944. What advantage does 

Caroline suppose may result from banks ? 945. What circum- 
stances had she overlooked, connected with the general establish- 
ment of banks ? 946, What effect does a bank have on thc'^*a- 

lue of specie i* 947. What is the immediate effect of opening .a 

new bank ? 



ON MONEY. 245 

the bank is established. It does not, however, force out 
the whole quantity which the paper represents, for inde- 
pendently of the general excess to which we have allu- 
ded, a bank must keep a certain quantity of specie in 
reserve to be enabled to fulfil the promise of paying its 
notes on demand. 

Caroline. You do not mean to say that a bank will 
keep a fund of specie, like that of Amsterdam, equal to 
the value of its notes, for that purpose ; for if so, no 
saving would result from the use of paper money. 

Mrs B, Certainly not. The profits of the bank 
arise from the employment of the capital thus saved, 
which consists of the difference between the amount of 
notes issued and the specie reserved in the bank. It is 
so improbable that every person possessed of notes 
should apply at once for payment, that there is no neces- 
sity for providing a fund equal to the amount of the 
notes in circulation in order to fulfil the engagement. 
Banks discover from experience what is the proportion 
of specie requisite to enable them to answer the average 
demand made upon them ; and they regulate the quan- 
tity of Dotes they issue accordingly ; for if they failed in 
their engagement to pay them in cash on demand, they 
would become bankrupt, 

Caroline. Yet I understand that the Bank of En- 
gland no longer pays its notes in specie ? 

Mrs B. That is true ; but it is owing to an act of 
parliament having been passed purposely to grant this 
privilege to the Bank of England for a specified time. 

Caroline, And if a Bank of England note can no 

948. Why does not a bank entirely supersede the necessity of 

specie ? 949. Must a bank keep a fund of specie equal to the 

Amount of its bills in circulation ? 950. From what do the pro- 

-fits of a bank arise? 951. What do bankers learn from experi- 
ence ? 952. In what respect was the bank of England exempt 

from the usual regulations of such establishments ? 

21* 



246 ON MONEY. 

longer be exchanged at pleasure for specie, in what does 
its value consist? 

Mrs B. In the expectation that it will one day be 
paid in gold, or something equivalent to gold ; this opi- 
nion renders bank-notes still current ; were such confi- 
dence destroyed, their value would be reduced to that 
of the paper of which they are made. 

Caroline. But since the Bank of England is not 
obliged to pay its notes in cash, it is at liberty to issue 
any quantity however great. In short, it seems to have 
discovered the philosopher's stone, for though it may 
not have found the means of making gold, it possesses a 
substitute which answers the purpose equally well. 

Mrs B. Excepting that, as it ha~s no intrinsic value, it 
cannot be exported in case of excess ; and you may re- 
collect our observing, that no use could be made of any 
superfluous quantity of money but to exchange it for 
foreign goods. An excess of currency produced by an 
over-issue of bank-notes must therefore remain in the 
country, and cause a depreciation in the value of money, 
which would be discovered by a general rise in the prices 
of commodities, and would be attended with all the evils 
enumerated in our last conversation. 

Caroline. And is there not great danger of a bank 
issuing an excess of notes, when it is not restricted by the 
obligation of paying them in specie ? 

Mrs B. A very considerable risk is certainly incur- 
red by such an exemption. 

When a bank issues more notes than are required for 
the purpose of circulation, its efiects in depreciating the 

953. What then rendered the bills of that bank valuable ? 954. 

How does Caroline compare the Bank of England to the philoso- 
pher's stone ? 955. In what respects does the Bank of England 

not answer as a substitute for gold and silver ? 956. Is there 

not great danger of a bank issuing an excess of notes, when it is 
not restricted by an obligation of paying them with specie ? 



ON MONEY. 247 

value of the currency, and raising the price of commo- 
dities, is at first, very trifling, because as soon as that 
effect is perceived, the coined money begins to disap- 
pear. Notwithstanding the prohibition of law, it never 
fails to make its escape out of the country. It is either 
clandestinely sent abroad, or privately melted, and ex- 
ported in bullion. As long therefore as an over-issue of 
notes serves to replace the coin which it forces out of 
the country, there is but little augmentation of the circu- 
lating currency ; but if after the specie has disappeared, 
the bank still continue to force an additional quantity 
of notes into circulation, the excess will be absorbed in 
it, the value of the currency will be proportionally de- 
preciated, and will produce a corresponding rise in the 
price of commodities. 

Caroline. But is it known whether the Bank of En- 
gland has m.aterially increased its issue of notes, since it 
has been exonerated from the obligation of paying them 
in cash f 

Mrs B. Of that there is no doubt ; but it is the 
opinion of many people that the supply of notes has not 
exceeded the demand;— that the paper-mine (as you 
call it) has increased its produce only in proportion to 
the increase of the produce of the country, and the pe- 
culiar exigencies of the times, political circumstances 
having deranged the natural order of things, and render- 
ed, during the late revolutions of Europe, a more than 
usual quantity of currency necessary. 

937. What takes place when a bank issues more notes than are 

required for the purpose of circulation ? 958. For how long 

time will there be but little augmentation of the circulating currency ? 

959. What will be the consequence, if the bank continues to 

force an additional quantity of notes into circulation, after the specie 
has disappeared ? 960. Did the Bank of England materially in- 
crease its issue of notes, after being exonerated from the obligation 

of paying them in cash ? 961. What circumstances were given 

as a justifying cause of such issue of notes ^. 



248 ON MONEY* 

Caroline. But was it not during the late war that all 
our gold coin disappeared, and was supposed to be 
melted down or exported ? And was there not a general 
rise in the price of provisions and all commodities at the 
same period ? 

Mrs B. That is true ; and the question is very 
much disputed whether these circumstances were owing 
to the war, and the taxes it entailed upon us, or to an 
over-issue of bank-notes. England was under the ne- 
cessity of payij3g her troops on the continent, and of 
subsidizing foreign sovereigns ; this, some people are of 
opinion, was a sufficient reason to account for the disap- 
pearance of our specie, and to render an additional issue 
of banknotes necessary. Then the rise in the price of 
provisions they attributed to the difficulty of importing 
foreign agricultural produce, which naturally raised the 
price of the home supply. Foreign commodities also 
became dear from their scarcity, and this enhanced the 
price of such goods as would serve as a substitute for 
them at home. 

Caroline. And commodities of English manufacture, 
so far from rising in price, were, I recollect, much cheaper 
during the last war. Now if the currency were depre- 
ciated, it should produce a general rise in the price of all 
commodities. I begin therefore to think that the bank 
may not have issued more notes than were required. 

Mrs B. The rise of price produced by a deprecia- 
tion of the value of money is general, but not universal ; 
for other circumstances may not only counterbalance the 
effect of the depreciation of currency, in regard to par- 

962. What question does Caroline ask respecting specie and the 
price of provisions in the late war? 963. How does Mrs B. an- 
swer this inquiry ; and what question does she say is very much dis- 
puted ? 964. What was England under the necessity of doing ? 

965. And to what other cause has the rise of provisions been 

attributed ? 966. Is the rise of price produced by the deprecia- 
tion of the value of money general? 



ON MONEY. 249 

tlcular commodities, but even render them cheaper not- 
withstanding. You must recollect that there are other 
causes which affect the price of goods. 

Caroline. True, the proportion of the supply to the 
demand ; but we have just been observing, that during a 
war there is a deficiency of supply, which increases in- 
stead of counteracting the effect of the depreciation of 
currency, as it would make commodities still dearer. 

Mrs B. During a war there is generally a deficiency 
of foreign commodities, and there may also be of agri- 
cultural produce for our own consumption ; but ot 
English manufactures intended for exportation, there 
must, as we have before observed, be a redundancy, 
owing to the difficulty of exporting them. Supposing, 
therefore, that a depreciation of the value ot money 
should produce a general rise in the value of commo- 
dities of 10 per cent, whilst on the other hand the 
excess of the supply occasioned a reduction of value of 
English manufactures of 20 per cent, at what rate 
would such goods sell ? 

Caroline. Ten per cent must be added on accouiit 
of the depreciation of money, and 20 per cent deducted 
on account of the excess of supply ; the goods would 
therefore sell 10 per cent lower than before. The cheap- 
ness of our own manufactures, then, affords no proof 
against a depreciation of the currency. This makes me 
again waver in my opinion, Mrs B. and I feel at a loss 
which side of the question to adopt. 

Mrs B. The strongest argument in favor of a de- 
preciation of the currency is, that guineas no longer 

967. Of what in England must there be a deficiency in the time 

of war ? 968. And of what is there a redundancy ? 969. 

What question does Mrs B. ask in relation to the effects from a ge- 
neral depreciation in the value of money ? 970. How is this 

question answered ? 971. What is the strongest argument in fa,- 

vorof a depreciation of currency ? 



250 ON MONEY. 

passed for the same value as gold bullion, which is the 
natural standard of the value of coined money. 

Caroline. Was the gold then adulterated, and an 
ounce of gold coined into more than 3Z. 175. lOjc?. ? 

Mrs B. No ; but gold bullion partook of the general 
rise of commodities, and instead of selling for 3Z. 175. 
lOJ^., it sold for four, and even once as high as 5/. an 
ounce. 

Caroline. But why did not guineas rise in the same 
proportion ? I cannot conceive how they can be less 
valuable than a similar weight of the gold of which they 
are made. 

Mrs B. The coined and uncoined gold remain in 
reality of the same value, but as it is not lawful for a 
guinea to pass for more than a pound-note and a shilling, 
the guineas are compelled to share the fate of the paper 
currency ; and if that be depreciated, all the coined 
money of the country, whether gold or silver, must be so 
likewise. 

Caroline. Then if it were not illegal, every one 
would melt his depreciated guineas and shillings, and 
convert them into gold and silver bullion ? 

Mrs B. Certainly. It is this which causes our 
specie to disappear, and transports it to foreign coun- 
tries, where it is freed from the shackles of a depreciated 
paper currency, and enabled to fetch its real value in 
exchange for goods ; it is this also which, as we before 
observed, brings foreign goods to be sold at our market, 
because it is dear ; and sends our money to purchase 
goods at foreign markets, because they are cheap. 



972. Why was this unless the guineas were adulterated ? 973. 

Why did not the guineas rise in the same proportion P-^ 974. What 

does Caroline suppose would be done if it were lawful ? 975. 

What becomes of this gold and silver currency which in England 
cannot be melted down ? 



ON MONEY. 251 

Caroline. But if an ounce of gold rises in price from 
3/. 175. lOjc?. to 5/., is it not rather the value of the bullion 
that has risen, than the currency that has fallen ? 

Mrs B. Gold bullion, like every other commodity, 
rises in price only, not in value ; and that rise is owing 
to the depreciation of the currency in which its price is 
estimated; were there no depreciation, bullion and 
guineas would both be worth 3/. 175. lO^d. an ounce. 

Caroline. This then I think seems to decide the 
point of depreciation. 

Mrs B. You must recollect that when I undertook 
to assist you in acquiring a knowledge of the principlies 
of political economy, we agreed to confine our inquiries 
to such points as were well established. We cannot, 
therefore, venture to decide upon questions which are 
yet in dispute. 

It is very easy to acquire some knowledge of the prin- 
ciples of a science, but extremely difficult to know how 
to apply them. I would particularly caution against 
hasty conclusions or inferences ; the errors arising from 
the misapplication of sound principles, are scarcely less 
dangerous than those that proceed from total ignorance. 

Let us now conclude our observations on currency, 
which we may henceforth consider as consisting not 
merely of specie, but of coined and of paper money. 

Caroline. Pray is it necessary that the value of the 
currency of a country should be equal to the value of the 
commodities to be circulated by it ? 

Mrs B. By no means. The same guinea or bank- 
note will serve the purpose of transferring from one in- 

976. What question does Caroline propose concerning an ounce 

of gold which rises in price from 3Z. 17s. 10 l-2d. to 5Z. ? 977. 

How is this question answered? 978. What does Mrs B. tell 

Caroline she must recollect ? 979. Wliat does she say is easy 

. imd what extremely difficult in poUtical economy ? 980. Is it 

liecessary that the value of the currency of a country should be 
kqual to the value of the commodities to be circulated by it ? 



252 ON MONEY. 

dividual to another several hundred pounds worth of 
goods in the course of a short time. There are besides 
many expedients for economizing money, the most re- 
markable of which is an arrangement made amongst 
bankers. Their clerks meet every day after the hours 
of business to exchange the draughts made on each 
other for the preceding day. If for instance, the bank- 
ing-house A. has draughts to the amount of 20,000/. on 
the banking-house B., the latter has also, in all probabil- 
ity, draughts upon the former, though they may not be 
to the same amount; the two houses exchange these 
draughts as far as they will balance each other, and 
are thus prevented the necessity of providing money for 
the payment of the whole. By this economical expedient, 
which is carried on amongst all the bankers in London 
east of St Paul's, I understand that about 200,000/. per- 
forms the function of four or five millions. 

Caroline. And what do you suppose to be the pro- 
portion^of the money to the value of the commodities to 
be circulated by it ? 

Mrs B. That, 1 believe, it would be impossible to 
ascertain. Mr Sismondi, in his valuable Treatise on 
Commercial Wealth, compares these respective quan- 
tities to mechanical powers, which though of different 
weights, balance each other from the quantity of their 
momentum ; and, to follow up the comparison, he 
observes that though commodities are by far the most 
considerable in quantity, yet that the velocity with which 
currency circulates compensates for its deficiency. 

Caroline. This is an extremely ingenious compa- 
rison, and I should suppose the analogy to be perfectly 



981. Why not? 982. What is mentioned as one of the best 

expedients for economising in the use of money ? 983. What 

amount of money is used by the bankers in London, east of St Paul's ? 

984. What does Sismondi say of the proportion of the money 

to the value of the commodities to be circulated by it ? 



ON COMMERCE. 253 

correct ; for the less money there is in circulation, the 
more frequently it will be transferred from one to another 
in exchange for goods. 

Perfectly correct is rather too strong a term. The 
analogy will only bear to a certain extent ; otherwise, 
whatever were the proportions of currency and of com- 
modities, they would always balance each other, and 
the price of commodities would never be affected by 
the increase or diminution of the quantity of currency. 



CONVERSATION XVIII. 

ON COMMERCE. 

Difference of wholesale and retail trade, — General ad- 
vantages of trade. — How it enriches a country. — • 
Advantages of retail trade. — Great profits of small 
capitals explained. — Advantages of quick return of 
capital to farmers and manufacturers. — Advantages 
of roads, canals, ^c. — Difference of the home trade, 
foreign trade, and carrying trade. — Of the home- 
trade, it employs two capitals at home, and puts in 
motion double the quantity of home industry. — It re- 
turns capital quicker. 

MRS B. 

We mentioned commerce as one of the modes of 
employing capital to produce a revenue ; but deferred 
investigating its effects until you had acquired some 
knowledge of the nature and use of money. We may 
nov/, therefore, proceed to examine in what manner 

985. What qualification does Mrs B. make to the ingenious com- 
parison of Sismondi ? 986. What is to be examined in the 

eighteenth conversation ? 

22 



254 ON COMMERCE. 

comraerce enriches individuals, and augments the 
wealth of a country. 

Those who engage their capitals in commerce or 
trade act as agents or middle-men between the pro- 
ducers and the consumers of the fruits of the earth; they 
purchase them of the former, and sell them to the latter ; 
and it is by the profits of the sale that capital so em- 
ployed yields a revenue. 

There are two distinct sets of men engaged in trade ; 
merchants, who purchase commodities (either in a rude 
or a manufactured state) of those who produce them — 
this is called wholesale trade ; and shopkeepers, who 
purchase goods in smaller quantities of the merchants, 
and distribute them to the public according to the de- 
mand — this constitutes the retail trade. 

Caroline. Trade will no doubt bring a revenue to 
those who employ their capital in it ; but I do not con- 
ceive how it contributes to the wealth of the country : 
for neither merchants nor shopkeepers produce anything 
new ; they add nothing to the general stock of wealth, 
but merely distribute that which is produced by others. 
It is true that mercantile men form a considerable part of 
the community ; but if their profits are taken out of the 
pockets of their countrymen, they may make fortunes 
without enriching their country. 

Mrs B. Trade increases the wealth of a nation, not 
by raising produce, like agriculture, nor by working up 
raw materials, like manufactures : but it gives an addi- 
tional value to commodities by bringing them from places 
where they are plentiful to those where they are scarce ; 

987. In what capacity do those act who employ their capital in 

commerce ? -988. It is said there are two distinct sets of men 

employed in trade — what are they ? 989. What objection does 

Caroline make to trade in a national point of view ? 990. In 

what manner does Mrs B. say that trade increases the wealth of a 
nation ? 



ON COMMERCE. 265 

and by providing the means of a more extended distribu- 
tion of commodities, it gives a spur to the industry both 
of the agricultural and manufacturing classes. 

Caroline. Do you mean to say that the merchant 
and tradesmen encourage farmers and manufacturers to 
increase their productions, by finding purchasers for 
them ? 

Mrs B. Yes. It would be impossible, you know, 
for every town or district to produce the several kinds of 
commodities required for its consumption ; different soils 
and climates, and various species of skill and industry 
are requisite for the purpose. Some lands are best 
calculated for corn, others for pasture ; some towns are 
celebrated by their cotton manufactures, others for their 
woollen cloths. Every place has, therefore, an excess 
of some kind of commodities and a deficiency of oth- 
ers ; which renders a system of exchanges necessary, 
not only between individuals (as we observed in treat- 
ing of the origin of barter,^ but between towns and coun- 
tries to the most distant regions of the earth. 

Now it is the business of merchants to exchange the 
surplus produce of one place for that of another. A 
man who deals in any particular commodity makes it 
his business to find out in what parts that commodity 
is most abundant, and will be sold at the lowest price ; 
and in what parts it is most scarce, and will fetch the 
highest price, and then to ascertain the least expensive 
mode of conveying it from the one to the other market. 

Caroline. In this they consult their own interest ; 
since to purchase at the cheapest and sell at the dearest 
market will give them the greatest profits. 

991. What question does Caroline then ask? 992. Would 

it be possible for every town and district to produce the several kinds 

of commodities required for its consumption ? 993. What is 

said of the diflferent kinds of soil and skill ? 994. What is the 

consequence of this difference ? — r^995. What is the business of 
the merchant? 



256 ON COMMERCE. 

Mrs B. No doubt ; but it is wisely and beneficially 
ordained that by consulting their own interest they are 
at the same time favoring that of th^^mmunity. When 
merchants hasten to send their^go^Jil^lo a market where 
they will sell at a high price, they supply those who are in 
want of such goods : the higher the price, the more urgent 
is the demaj^; it is a deficiency that has rendered them 
dear, and by furnishing the market with an ample supply, 
merchants not only satisfy the wants of the purchasers, 
but ultimately lower the price of the commodity. 

Do you think that manufacturers would be able to 
dispose of an equal quantity of goods without the inter- 
vention of mercantile men ? In such a case Manchester 
would be reduced to distribute its cottons merely within 
its own precincts and environs, instead of supplying, as it 
now does, not only the demand of all England, but 
even that of the most remote provinces in America. 

Trade encourages industry, in the second place, by 
rendering commodities cheaper. The merchant by 
dealing in large quantities, is enabled to bring goods to 
market at a less expense of conveyance, and can there- 
fore afford to sell them on lower terms than if the con- 
sumer were obliged to send for them to the places where 
they are produced. 

Caroline. Yet things may generally be bought at the 
lowest price, where they are produced or manufac- 
tured ? 

Mrs B. True ; but if you add the charges of a 
private conveyance, they will cost you much dearer. 
Had we no means of procuring coals, than by sending 

996. How do merchants, at the same time of most advancing 

their own interests, most benefit the public ? 997. What would 

be the consequence to the manufacturer were it not for the mer- 

ehaut ? 998. How is it that trade makes commodities cheaper ? 

999. What objection does Caroline make to this statement ? 

1000. Hq vV is the objection in the expense of conveyance ? 



ON COMMERCE. 257 

a wagon to Newcastle, though we should pay less for 
them there than in London, they would, from the expense 
of carriage, cost us more. Merchants who deal in 
large quantities have a regular system of conveyance for 
their goods, which considerably diminishes the charges. 
The coals are by them transported in ships to the dif- 
ferent sea-ports, and thence conveyed in barges to the 
inland parts of the country wherever water carriage is 
practicable. 

Caroline, It would, to be sure, not only be very 
expensive, but extremely inconvenient, were we obliged 
to send to distant parts for the commodities they pro- 
duce. If, for instance, it were necessary to send to 
Sheffield to purchase a set of knives and forks ; to 
Leeds for a coat, and to Norv;ich for a shawl ; — or, 
without going so far, were it requisite to send into the 
country for corn, meat, hay, in short, everything which 
the country produces, these things would cost us much 
more than if we bought them of shopkeepers. 

But admitting that trade, by facilitating the distribution 
of commodities, promotes their consumption, I cannot 
understand how that can conduce to the wealth of a coun- 
try : it increases its comforts and enjoyments, but it 
seems to me, to encourage expenditure, rather than pro- 
duction. 

Mrs B. To increase the comforts and enjoyments of 
a country is the ultiinate aim of national wealth ; and 
whilst trade promotes consumption, by rendering com- 
modities cheaper, it does not engender prodigality in the 
consumer, but encourages industry in the producer, to 

1001. Why can merchants transport goods cheaper than private 
individuals? 1002. What cases does Caroline mention of in- 
creased convenience from the business of merchandise ? 1003. 

But what objection does she still suggest, respecting expenditure 

and production ? 1004. What is the ultimate aim of national 

wealth ? 

22* 



258 ON COMMERCE. 

augment the supply. A reduction of price brings a 
commodity within the reach of a greater number of 
persons, which increases the demand for it; the man 
who can afford to wear only a linen frock, will, when 
commodities are cheaper, be able to wear a coat. He 
who could allow himself but one coat in the year, can 
now without extravagance wear two. 

This increasing demand for commodities spurs the 
industry of the farmer and manufacturer, and they en- 
rich themselves by furnishing the requisite supplies. 
With their wealth their consumption also augments; for 
the wants of men increase with their means of satisfy- 
ing them ; and when they add to their income, they 
usually add also to their expenditure. The farmer has 
more to satisfy the desires of the manufacturer; and the 
manufacturer produces more to supply the demands of 
the farmer : so that each is enabled to give and receive 
a greater quantity of things in exchange. These ex- 
changes it is true, are made through the agency of mer- 
chants, and by means of money, but they are effectually 
exchanges of commodities, as really as if the manufac- 
turer supplied the farmer with clothing in exchange for 
provisions. The increase of saleable commodities 
affects in a similar manner all classes of people. The 
proprietor of land improves his fortune by the increasing 
value of his rents, which the prosperous state of agricul- 
ture enables the farmer to pay ; and the laborer bet- 
ters his condition by, the rise in the rate of wages result- 
ina: from the increased demand for labor. The whole 
may be summed up by saying, that, the quantity of 

1005. What good effects are enumerated as coining from a 

reduction of price ? 1006. In what ratio do the wants of men 

increase ? 1007. What mutual correspondence is there between 

the farmer and the manufacturer ? 1008. Through whose agen- 
cy are these exchanges made ? 1009. How is the fortune of the 

proprietor of land improved ? 



ON COMMERCE. 259 

commodities being increased, a larger portion will fall to 
the lot of every consumer who has any share in their 
production. 

Caroline, I now begin to understand the general 
advantages resulting from commerce. The retail trade 
carried on by shopkeepers must be attended with t^e 
same happy effects. It would be extremely inconve- 
nient to the rich, and impracticable for the poor, to'pur- 
chase the commodities they wanted in such large quan- 
tities as are disposed of by merchants and wholesale 
dealers. Were there no such trade as a butcher, for 
instance, every family would be obliged to purchase a 
whole sheep or a whole ox of the farmer. 

Mrs B. Retail trade is one of the most useful 
subdivisions of labor. Nothing can be more desirable 
than that the poor, who are maintained by daily or 
weekly wages, should be able to purchase their pro- 
visions in as small quantities as possible. 

Caroline, Yet I have often regretted the high price 
which the lower orders of people are obliged to pay for 
fuel, candles, grocery, and various little articles with 
which they are supplied by the chandlers' shops ; whilst 
the higher ranks, who can afford to purchase the same 
goods in larger quantities, obtain them of more exten- 
sive dealers, at a cheaper rate. 

Mrs B. You must consider that were there no small 
shopkeepers, the lower classes would be reduced to the 
utmost distress ; and these petty dealers cannot afford 
to sell their pennyworths without being paid for the ad- 
ditional labor and trouble such kind of traffic requires. 

1010. How is the laborer benefited? 1011. What advanta- 
ges does Caroline say result from the retail trade ? 1012. What 

does Mrs B. say of it? 1013. What apparent evil to the poor 

does Caroline say she has always regretted? 1014. What does 

Mi's B. say of this supposed evil ? 



260 ON COMMERCE. 

Their profits cannot be exorbitant, otherwise competi- 
tion would in lime reduce them to their natural stan- 
dard. 

Caroline. But by selling small quantities at a higher 
price, they must make more than the usual rate of pro- 
fit ; and how do you reconcile this to the common level 
of profit in all employment of capital ? 

Mrs B. By reckoning whatever gains they make 
above the usual profits of capital, as ivages, that is to 
say, the reward of their personal labor. 

The smaller is the capital which a man employs, the 
greater is the proportion which his wages will bear to 
the profits of his capital. A man who sells oranges in 
the streets has laid out perhaps a capital of twenty or 
thirty shillings on the goods in which he deals ; the usual 
profits of trade on such a sum is two or three shillings 
a year ; but if he did not carry about oranges for sale, 
he would work as a laborer, and get perhaps two shil- 
lings a day wages ; these two shillings a day, or six 
hundred and twentysix shillings a year, the man must 
make by the sale of his oranges, in addition to the 
usual profits of trade ; the whole of his gains go, how- 
ever, under the name of profits, because the distinction 
can be made only in theory. 

Caroline. But all tradesmen and mercantile men 
devote their fime and attention to their business: should 
not, therefore, a portion of their gains be considered as 
the reward of their personal labor, which must be 
valuable in proportion to the extent and importance 
of the concern in which they are engaged. 

1015. What will always prevent exorbitant profits in the sale of 
goods ? 1016. How are the profits in the retail of goods recon- 
ciled to the common level of profit in all employment of capital ? 

1017. What illustration is made of this in the case of the person 
who retails oranges ? 



ON COMMERCE. 261 

Mrs B. No doubt ; yet it will bear but a small pro- 
portion to their profits compared with that of petty 
dealers. A merchant who makes in trade an income of 
5000/. a year, were he to engage himself as clerk, 
would probably not obtain a salary of above 500/. ; his 
wages would therefore be equal to only one-tenth of his 
profits, whilst those of the man who sold oranges would 
be above 200 times the amount of the profits of his 
capital. 

Another advantage resulting to the farmer and manu- 
facturer, from the disposal of their goods to merchants, 
is the quick return of the capital they have employed 
in their production ; for they receive the price of their 
goods from the merchants much sooner than they 
would, were they obliged to collect it gradually from the 
consumers. 

Let us suppose a cotton manufacturer who devotes a 
capital of a thousand pounds to the employment of as 
many laborers as. it will maintain, and sells their work to 
a wholesale dealer for 1100/, With this money he 
immediately sets his men and his mills to work again ; 
whilst if he retailed the goods himself, though instead 
of J 100/. he might perhaps get 1200/. for them, yet, as 
the money would come in very slowly, he and his work- 
men would necessarily be kept a long time out of 
employ. 

Caroline. To the farmer such delays would prove 
ruinous if he could not sell his crops in time to proceed 
with the necessary cultivation of the farm for the ensu- 
ing season. 

1018. Should not a portion of the gains in business, with all 
tradesmen and mercantile men, be considered as the reward of their 

personal labor ? 1019. What cases are mentioned to illustrate 

this ? 1020. What is another advantage to the farmer and manu- 
facturer from the disposal of their goods to the merchant? 1021. 

What illustration is given of the benefits resulting from this quick 

return ? 1022. How would such delays prove ruinous to the 

farmer ? 



262 ON COMMERCE. 

Mrs B. In order to avoid such extremities both the 
fanner and the manufacturer would be obliged to divide 
their capital into parts, and employ the one in raising or 
manufacturing commodities and the other in disposing 
of them. To the occupations of agriculture or manu- 
factures, they would find it necessary to add that of 
trade, a complication which would be equally injurious 
to each of the concerns. Commerce is one of the 
economical divisions of labor ; if it sets apart a certain 
number of men, for the purpose of circulating and dis- 
tributing the produce of the earth, it is in order that 
those who are engaged in raising and manufacturing that 
produce, should be able to devote the whole of their 
capital, their time and their talents, to their respective 
employments. It is worthy of observation, too, that 
none of these divisions are enforced by law, but exist 
under the choice of the parties, and has been adopted 
from a view to their general interest. 

But although it is advantageous to separate commerce 
from other branches of industry, it is desirable that its 
operations should be facilitated as much as possible, 
both in order that the agriculture and manufactures 
should not be deprived of too many laborers, and that 
commodities should be brought to market with the least 
possible expense. Good and numerous roads and navi- 
gable canals are extremely conducive to this end, as 
they enable the produce of the country to be conveyed 
with ease and expedidon to the several markets; 
for ease and expedition economize time and labor, and 
economy of time and labor is productive of cheapness. 



1023. In order to avoid such extremities to what would they 

be obliged to resort ? 1024. What is said of Commerce ? 

1025. What is here worthy of observation ? 1026. Is it advan- 
tageous to separate commerce from agriculture ? 1027. Why is 

it desirable that its operations should be facilitated ? 1028. In 

TV hat way ar^ canals and roads conducive to this end ? 



ON COMMERCE. , 265 

Caroline. Were there no roads, the farmer being 
without means of sending his crops to market would not 
produce more than could be consumed by his family, 
and perhaps some few customers in his neighborhood, 
and he must be content to clothe himself with the 
fleece of his flocks and the skins of his herds, for he 
would be unable to procure manufactured articles. Nor 
would the manufacturers be better off, as the market 
for the disposal of their goods would be equally limited. 

Mrs B. Neither towns nor manufactures could 
exist in such a state of things, because they could not 
be supplied with the produce of the country, which is 
still more necessary to their existence, than the work- 
manship of the towns is to the farmer. It is the. surplus 
produce of the country which pays for the workmanship 
of the towns, and the surplus workmanship of the towns 
that pays for the produce of the coimtry. The greater 
therefore the intercourse between town and country, 
the greater is the! encouragement given to the industry 
of both. 

History teaches us that in all old settled countries, no 
material improvement has taken place in the cultivation 
of the lands, without a considerable advance in the state 
of manufactures and commerce; and Adam Smith 
even goes so far as to say, that " through the greater part 
of Europe the commerce and manufactures of cities 
instead of being the efl?ect, have been the cause and 
occasion of the improvement and cultivation of the 
country." 

But as the forms of governments, and the manners 
and customs of our barbarous ancestors, have constantly 

1029. What would be the consequence were there no roads ? 

1030. What pays for the workmanship of the towns? 1031. 

What for the produce of the country ? 1032. What does history 

teach us relative to the cultivation of lands in old settled countries ? 
1033. What is the observation of Adam Smith. 



264 ON COMMERCE. 

interfered with and restricted the progress of wealth and 
civilization of Europe, the natural order of things has fre- 
quently been reversed, and towns have arisen, not from 
the surplus wealth of the country, but as citadels and for- 
tresses in which the people found shelter from the 
oppression of their superiors, and the incursions of their 
warlike neighbors. We must look to America for the 
natural effects of the progress of wealth and civilization, 
and we shall there behold the habitations of farmers 
scattered over the face of the country, and towns built 
only after cultivation was far advanced. 

Caroline. In expatiating on the advantages of facility 
of conveyance, it must not, however, be forgotten, that 
the land which is converted into roads is taken from til- 
lage ; and could we calculate the quantity of corn and 
hay which the roads, in a state of culture, might have 
produced, it would perhaps be found that some of them 
have occasioned more loss than gain. 

To take land from cultivation for the purpose of roads 
appears to me very analogous to taking laborers from 
agriculture for the purpose of trade. 

Mrs B. The result is in both cases similar ; for there 
can be no doubt but that the general effect of roads and 
canals is to increase the produce of the country. If we 
are indebted to merchants for the advantages of trade, 
roads and canals are the instruments with which they 
carry it on. Deprived of such means their operations 
would be very circumscribed ; there would be no trade 
but at sea-ports, and along the course of rivers. 

The charges of conveyance from Liverpool to Man- 
chester on the duke of Bridgewater's canal is six shil- 



1034. To what country must we look for the effect of progress 

in wealth and civilization ? 1035. What shall we behold there .' 

1036. In expatiating on the advantages of facility of conveyance , 

what must not be forgotten .' 1037. What are the charges of 

conveyance from Liverpool to Manchester on Bridgewater canal ? 



ON COMMERCE* 265 

lings a ton, whilst the price of land carriage is forty 
shillings. 

Caroline. If there had been a river from one of those 
towns to the other, the expense of carriage would have 
been still less than that of the canal. 

Mrs B. I beg your pardon ; a river is seldom uni- 
formly navigable, and is always more or less circuitous 
in its course ; and where the stream is powerful, it will 
admit of navigation only in one direction, as is the case 
in some of the American rivers. Before the Bridge- 
water canal was dug, the usual mode of conveyance of 
goods was along the Mersey and the Trevell, and the 
cost was twelve shillings a ton, just double that of con- 
veyance on the canal. Macpherson observes, that 
" this spirited and patriotic enterprise of the duke of 
Bridgewater is rewarded by a vast revenue arising from 
his water carriage and his formerly useless coal-mine ; 
and the surrounding country is benefited a pound at 
least in every shilling paid to the duke." 

Caroline. This reminds me of a circumstance that 
occurred during a tour in Wales ; we were admiring a 
neat fountain which supplied a village with water, and 
were informed by the landlord of the inn, that he had 
constructed it, and had had the water conveyed from a 
distant spring, whence the people of the village had for- 
merly been under the necessity of fetching it. A tri- 
fling sum was annually paid by each family for liberty 
to use this water, and the landlord thought it necessary 
to make many apologies for not allowing it them free of 
expense, and talked much of the money he h?d laid out 
in the enterprise. My father assured him that he was 
convinced the speculation was still more beneficial to the 



1038. Before that canal was dug what was the mode of convey- 
ance ? -1039. At what expense ? 1040. What does Mac- 
pherson here observe concerning the revenue ? 1041. What cir^ 

cumstance is mentioned as having occurred in Wales ? 
23 



266 ON COMMERCE. 

villa2;e than it was to himself ; that as the inhabitants had 
the option of fetching water for themselves, the payment 
proved that it was because they could turn the time and 
labor they bestowed on the conveyance of water to bet- 
ter account ; and upon inquiry we found the village had 
been in an improving state ever since the erection of this 
fountain. It had not only become more opulent, but had 
acquired habits of cleanliness, which had proved very 
beneficial to the health of the people. 

Mrs B. There are three species of commerce in 
which merchants engage their capitals. The home 
trade, foreign trade, and the carrying trade. 

The home trade comprehends all the internal and 
coasting trade of a country. The foreign trade is that 
in which we exchange our commodities for those of 
foreign countries ; and the carrying trade consists in 
conveying the commodities of one foreign country to 
another. Let us at present confine our observations to 
the home trade.' 

Caroline. The home trade, I conclude, must be the 
most advantageous to the country, because it encourages 
the industry of our own people. 

Mrs B. But what difference is there whether our 
laborers are employed to work for us, or for foreigners ? 
for if we export English goods, we receive an equal 
amount of foreign goods in exchange 5 so that foreign 
laborers work equally for us in return. 

It is true, however, that the home trade possesses over 
the foreign trade the advantage of employing a greater 
quantity of our own capital. As trade consists in an 
exchange of commodities, two capitals must be employed 
in the purchase of the different commodities to be ex- 

1042. How many species of commerce are there in which mer- 

chants engage their capitals? 1043. What does the home trade 

comprehend ? 1044. What the foreign trade ? 1045. Of 

what does the carrying trade consist ? 1046. In what way does 

home trade possess an advantage over foreign trade ? 



ON COMMERCE. 267 

changed ; in the home trade both these capitals are our 
own, and both of them are employed in the purchase of 
British goods, the produce ofBrhish laborers; thus 
affording the means of maintaining and continuing their 
industry. 

In the foreign trade, only one of the capitals engaged 
is our own ; the other is foreign. When, for instance, 
the hardware of Birmingham is exchanged for the cot- 
ton goods of Manchester, the country benefits by the 
profits of the capitals of both the parties concerned in 
the exchange. But if the Birmingham merchant sends 
his goods to France, to be exchanged for cambrics, this 
country will benefit only by the profits of one of the par- 
ties, those of the French merchant enriching his own 
country. 

Caroline. And it must be desirable that the second 
capital should be English instead of foreign, not only on 
account of the capitalist, but also of the laborers whom 
it employs. 

Mrs B. Another advantage of the home trade is, 
that it affords a quicker return of capital, which is a fur- 
ther means of promoting industry. The nearer is the 
market at which the merchant disposes of his goods, the 
sooner will his capital be returned to him, and the sooner 
will he be able to take other goods from the hands of 
the farmer or manufacturer. If a London merchant 
trades with Sheffield or Manchester, his capital may be 
returned to him in the course of a few weeks ; if with 
America or the East Indies, it may be a year or two, or 
more, before he gets it back. The greater the vicinity 
of the market, therefore, the greater the number of sales 
and purchases he will be able to make in a given time. 
A capital of 1000/., for instance, might in the home 

1047. What illustration is given of this? 1048. What other 

advantage is derived fromtiome trade ?- — -What illustration of this 

is given in the case of a London merchant ? 1049. How is this 

pr.ove,d in the supposition of the 1000?. useid as a capital,' 



268 ON COMMERCE. 

trade be returned once a month, and enable the mer^ 
chant, during the course ofthe year, to purchase 12,000Z. 
worth of goods; whilst, if he sent his nnerchandise to 
India, two years would probably elapse before he got 
his capital returned. In the first case, therefore, the 
1000/. capital would afford twenty four times more en- 
couragement to industry than it would in the latter. 

Caroline. You do not thence mean to infer, that in the 
first case the profits would be twentyfour times greater ? 

Mrs B. Certainly not. Competition is, you know, 
perpetually tending to equalise the profits of capital, in 
whatever way it is employed. Profits will consequently 
be proportioned to the slow return of capital ; and must 
therefore, be reckoned annually, and not calculated upon 
every time the capital is returned. 

Caroline. The period of the return of capital ap- 
plies, then, not so much to the home or foreign trade, as 
to the distance of the market ; for capital might be re- 
turned quicker in trading, with Calais or Dunkirk than 
vWth Edinburgh or Cork.'' 

Mrs B. It is very true ; and how much is it to be 
regretted that jealousies and dissensions should so fre- 
quently impede and restrict the trade between neighbor- 
ing nations, which would otherwise be carried on with 
such great and reciprocal advantage ! But we shall re- 
serve til! our next interview the observations we have to 
make on foreign trade. 

1050. To what are profits proportioned ? 1051. How often 

must they be reckoned ? 1051. What does Mrs B. say should 

be regretted ? 



ON FOREIGN TRADE. 269 

CONVERSATION XIX. 

ON FOREIGN TRAPE. 

Advantages of foreign trade, — It employs the surplus of 

capital, and disposes of a surplus of commodities. — 

) Cff bounties. — Effects of restrictions on foreign trade. 

— Extract from Sayh Political Economy. — Extract 

from Franklin's Works, 

CAROLINE. 

At our last interview, Mrs B., you were regretting 
that any restraint should be imposed on our trade with 
foreign countries ; but since you have explained to me 
the superior advantages arising from the home trade, I 
should have supposed that every measure tending to 
discourage foreign commerce, and promote our own 
industry, would be extremely useful. 

Mrs B. You would find it difficult to accomplish 
both those objects ; for in order to encourage our own 
industry we must facilitate the means of selling the pro- 
duce of our manufactures, and extend their market as 
much as possible. Oh the other hand, if we prohibit 
exportation we limit the production of our manufactures 
to the supply which can be consumed at home. No 
measure tending to the discouragement of foreign trade, 
can, therefore, be said to promote the industry of the 
country. 

Caroline. But foreign trade cannot be both advan- 
tageous and disadvantageous to a country ? 

Mrs B. It is never disadvantageous, but only less 
beneficial than the home trade. It is only after the de- 
mand at home is supplied, that our surplus produce is 
sent to foreign markets. When we have more capital 

1052. In order to encourage our own industry what means must 

we facilitate ? 1053. Can foreign trade ever be disadvantageous 

to a country ? 

23* 



270 ON FOREIGN TRADE* 

to dispose of than is required in the home trade, instead 
of leaving it useless, and the laborers it would employ 
idle, we set them to work for foreign markets. Jf, for 
instance, the woollen manufacturers of Leeds, after 
having supplied the whole demand of England for broad- 
cloths, have any capital left, they will use it in the pre- 
paration of woollen goods for exportation. 

Caroline. Why not rather employ it in the fabrica- 
tion of other commodities which may be consumed at 
home ? 

Mrs B. If there were a deficiency of capital in any 
other branch of industry at home, the redundancy would 
naturally be drawn to that branch ; but if all the trade, 
that is, all the exchanges that could be made at home, 
have been made, we send the residue of our commodi- 
ties to foreign markets for sale. 

Caroline. Yet it appears a great hardship on the poor 
to send goods abroad, which so many of them are in 
want of at home. 

Mrs B. The poor are at first supplied with what- 
ever they can afford to purchase ; and without the means 
of purchase you must recollect, that there can be no 
effectual demand. It is not to be expected that farmers 
and manufacturers should labor for them merely from 
charitable motives, and were they so disposed, they 
would not long possess the means of continuing their 
benevolence. It would be very wrong, therefore, to 
consider this surplus produce as taken from the poor ; 
for it would not have been produced had there been no 
demand for it in foreign countries. 

Caroline. That is very true. In all employment of 
capital men labor with a view to profit; they work, 

1054. What instance is here mentioned?— — 1055. Why n-ot 
employ it in the fabrication of other commodities which may be 

consumed at home ? 1056. Without the means of purchase can 

there be any effectual demand ? 1057. In all employment of 

capital with what view do men labor ? 



ON FOREIGN TRADE. 271 

therefore, only for those who will pay them the value of 
their produce. And it is easy to conceive that those 
who have no further want of English commodities may 
yet wish to procure foreign goods. The English mer- 
chant will therefore say, " Since there is no more demand 
for the goods I deal in, I will export the remainder, 
which will be' purchased abroad, and I shall get foreign 
commodities in exchange ; — though my countrymen do 
not require any more cotton goods, 1 know that they 
will purchase wines, coffee, sugar, &z:c." 

Airs B. Very well. Let us examine now what 
would be the effect of confining the employment of com- 
mercial capital to the home trade. If the inhabitants of 
the West Indian islands, Jamaica, for instance, were to 
prohibit the exportation of coffee and sugar, and the 
planters were obliged to trade only within the island, the 
consequence would be that the demand for coffee and 
sugar would be very insignificant, and that an inconsi- 
derable part only of the capital of the colony would find 
employment. The same effect would take place in 
-Russia, if foreign merchants were not allowed to pur- 
chase the hemp and flax so abundantly produced in that 
country. If in Peru and Chili the exportation of indigo, 
bark, and other drugs, was prohibited, the Europeans 
who purchase them, would not be the only sufferers ; the 
Americans would be impoverished for want of employ- 
ment for their capital. 

Caroline. All this is very clear, I admit. But what 
security have we that merchants will not employ their 
capital in foreign commerce, before the demand for it in 
the home trade is fully supplied? 

1058. What illustration- is given of this? 1059. What is now 

to be the subject of our examination ? 1060. What instance is 

given of the inhabitants of the West Indian islands? 1061- 

What regarding Russia ? 1062. What in Peru and Chili? 



272 ON FOREIGN TRADE. 

Mrs B. That security is derived from the natural 
distribution of capital according to the rate of profit. If 
foreign commerce employed more capital than the coun- 
try could spare, the demand for it at home would raise 
the profits of the home trade, and the temptation of these 
increased profits would soon restore that portion of capi- 
tal which had been unnecessarily withdrawn from it. 

Caroline. What an excellent criterion the rate of 
profit affords of the employment of capital most advan- 
tageous to the community ! When foreign commerce 
then offers greater profits than the home trade, it proves 
that there is a greater demand for capital in that branch 
of industry ? 

Mrs B. Yes, it proves that the country possesses a 
surplus quantity of produce either agricultural or manu- 
factured, which cannot be disposed of in the home mar- 
ket 5 and if the owners of this surplus were prevented 
from exchanging it for foreign commodities, it would not 
in future be produced, and those who produced it would 
be thrown out of employment. 

The first commodities a country usually exports is 
agricultural produce, which she exchanges for manu- 
factured goods ; this is still the case with America, on 
account of its being a newly setded nation ; it is also the 
case with Poland and Russia, those countries having 
made slower progress in wealth and population than the 
other communities of Europe. When nations are con- 
siderably advanced in wealth and population, all the food 

1063, What security have we that merchants will not employ 
their capital in foreign commerce before the demand for it in the 
home trade is fully supplied? 1064. If foreign commerce em- 
ployed more capital than the country could spare, what effect would 

the demand for it have upon the home trade ? 1065. How 

would that portion of capital which had been withdrawn from it be 

restored ? 1086. When foreign commerce offers greater profits 

than the home trade what does it prove ? 1067. W^hat are the 

first commodities which a country usually exports ? 1068. With 

what nations is this still the case .•• 



ON FOREIGN TRADE. 273 

they can raise is required at home, and manufactures 
are established in order to employ the increased numbers 
of people 5 in the course of time they find it expedient 
to export manufactured goods in return for corn, the 
home supj)ly5 which was at first so redundant, being no 
longer sufficient to maintain the increased population. 
And it is at this point that England is now arrived. 

Caroline. I am surprised that foreign commerce 
with distant countries should ever offer sufficient profits 
to afford a compensation to the merchant for the disad- 
vantages arising from the slow return of capital. 

Mrs B. If it did not, no merchant would engage in 
it. The greater the distance of the market to which he* 
sends his goods the greater must be the profits on their 
sale, to make up not only for the tardy return of his 
capital, but also for the charges of conveyance of the 
goods. Freight and insurance from sea risks are both 
to be deducted from the profits of the merchant in 
foreign trade. 

Caroline. Then since we are obliged to sell our 
goods at such high prices in distant markets, I wonder 
that we should find purchasers for them : would it not 
answer better for those countries to produce them at 
home ? 

Mrs B. You may be assured that no nation will 
purchase from abroad what may be procured of the same 
quality and for less expense at home. But all coun- 
tries are not equally capable of producing the same kind 
of commodities, either rude or manufactured. The 
gifts of nature are still more diversified in the different 
climates of the earth, than the habits and dispositions of 
men. It would be impossible for us at any expense to 

1069. When nations are advanced in wealth and population, for 
what are manufactures established ? 1070. What are to be de- 
ducted from the profits of the merchant in foreign trade ? 1071. 

Are all countries capable of producing the same kind of commo- 
dities ? 



274 ON FOREIGN TRADE. 

produce the wines of Portugal, on account of the cold- 
ness of our climate. We can procure them only by an 
exchange of conamodities ; the Portuguese take our 
broadcloth in return ; this, it is true, they might manu- 
facture at home ; but as our climate is peculiarly favora- 
ble to pasturage, and our workmen particularly skilful in 
manufactures, broadcloths could not be made in Portu- 
gal equally good at the same expense, including the 
charges of freight and insurance ; and whilst the Portu- 
guese can purchase them of us for less than they can 
fabricate them at home, it is certainly their interest to 
procure them in exchange for commodities, the culture 
or fabrication of which is more suited to the nature of 
their climate and the habits of the people. 

But the difference of price of our manufactured goods 
at home or abroad is not so great as you would imagine 5 
in articles of small bulk it is very trifling. 1 recollect 
some years since purchasing an English pocket-book at 
Turin for nearly the same price that it would have cost 
in London. 

Caroline, How then was the expense of conveyance 
defrayed ; and what compensation was there for the 
slow return of capital? 

Mrs B. These expenses probably did not more 
than counterbalance the high rent and taxes paid by 
London shop-keepers, which I believe are comparatively 
insignificant at Turin. There might, perhaps, also be 
some bounty on the exportation of such goods, which 
would enable the merchant to sell them at a lower price. 

Caroline. Pray what is a bounty on goods ^ 

Mrs B. It is a pecuniary reward given by govern- 

1072. Why does Mrs B. say it would be impossible to produce 
the wines of Portugal ? 1073. How then can they be procur- 
ed ? 1074. Why do not the Portuguese manufacture cloths ? 

1075. How is the expense of conveyance defrayed, and what 

compensation is there for the slow return of capital ? 1076. What 

is a bounty on goods ? 



ON FOREIGN TRADE. 275 

ment for the exportation of certain goods. Governments 
so far from partaking of your prejudices against foreign 
trade, often think it right to encourage the exportation 
of their manufactures by such artificial measures. 

Caroline. A bounty then on any commodity has the 
effect of inducing merchants to export more of it than 
they would otherwise do, as it raises their profits. But 
in consequence of this, capital will be drawn into this 
trade beyond its due proportion ? 

J\J?s B. Certainly ; a bounty often tempts merchants 
to invest capital in a trade which otherwise would not 
answer; that is, to export goods which would not yield" 
a profit, after paying the expenses of conveyance, with- 
out such encouragement; and this capital, were it not 
artificially drawn out of its natural course, would flow 
into channels which would yield profits, without any 
expense to government. 

Caroline. Here then my apprehension of foreign 
trade is well founded ; for more capital is drawn into it 
than is required to preserve the equality of profits. 

Mrs B. That is sometimes the case ; but it may 
also be unduly drawn from one branch of foreign com- 
merce to another. The effect of bounties, however, is 
generally counteracted by the nations with whom we 
trade. Alarmed at our thus forcing our goods upon 
them, and dreadfully apprehensive of its interfering with 
the sale of their own manufactures, they immediately lay 
a duty on the commodity on which we grant a bounty, 
and oblige it to pay, on entering their territory, a sum 
at least equivalent to that, which we bestow on it on 
quitting our own. 

1077. What is a bounty on goods ? 1078. What effect has 

bounty on the exportation of goods ? 1079. What is the conse- 
quence ? 1080. What would become of this capital were it not 

artificially drawn out of its natural course ? 1081. Is the effect of 

bounties counteracted ? 1082. In what manner is it counter- 
acted ? 



276 ON FOREIGN TRADE* 

Caroline. What a pity that either party should inter- 
fere to check and restrain the natural course of com- 
merce ! The disease, however, seems to call for the 
remedy ; as it is sometimes expedient to take one poi- 
son as an antidote to another. 

Mrs B. If we are so generous, or so foolish, as to 
enable foreigners to purchase our commodities at a 
cheaper rate, by paying a part of the price for them,' are 
we not doing them a service, and ourselves an injury ? 
and is it wise in them to endeavor to counteract such a 
measure ? 

Caroline. True ; I did not consider it in that point 
of view. It is really laughable to see two nations, the 
one strenuously endeavoring to injure itself, whilst the 
other studiously avoids receiving a benefit ; and thus, 
by the mutual counteraction of each other's artifice, they 
leave the trade to follow its natural course. 

I am now perfectly satisfied of the advantage of 
obtaining by means of foreign commerce, such articles as 
cannot be produced at home ; but I confess I do not 
feel the same conviction with regard to commodities, 
which might be produced at home, though with some 
additional expense. 

Mrs B. Why should it not be the interest of a coun- 
try as well as that of an individual, to purchase commo- 
dities wherever they canbe procured cheapest.^ It might 
be very possible, as it has been observed by an ingenious 
writer,^ for England to produce at a great expense 
of labor the tobacco which we now import from Virgi- 
nia ; and the Virginians, with no less difficulty, might 
fabricate the broadcloths with which we furnish them. 
But if our climate is better adapted to pasturage, and 
* Sir Francis Divernois. 

1082. In what way does Mrs B. suppose the English are doing 

other nations a service and themselves an injuiy ? 1083. How 

is it evident that the exchange of commodities is a mutual advan- 
tage ? 



ON FOREIGN TRADE. 277 

ibat of Virginia to the culture of tobacco, it is evident 
that the exchange of these commodities is a mutual ad- 
vantage. 

Caroline. But are not the goods exchanged in trade 
of equal value ? If we send the Virginians a thousand 
pounds worth of broadcloths, they will send us a thou- 
sand pounds worth of tobacco in return. It may be a 
convenient measure, and the exchanging merchants will 
each make their profits ; but I cannot perceive how the 
country can derive any accession of wealth from such 
traffic. 

Mrs B, Recollect that we said trade gives an ad- 
ditional value to commodities by bringing them from 
places where they are plentiful, to those where they are 
scarce. When we ship off 1000/. worth of broadcloths 
for Virginia, and the Virginians export 1000?. worth of 
tobacco for England, the commodities exchanged are of 
equal value ; but they each acquire an additional value 
during the transport : the tobacco was not worth so much' 
in Virginia as it is when it arrives in England, because 
not being cultivated here, it is more scarce and in great- 
er demand with us. The broadcloth was not worth so 
much in England as it is when it reaches Virginia, 
because, not being fabricated in that country, it is more 
scarce and in greater demand there. 

Caroline. Very true ; but if we both cultivated 
tobacco and fabricated broadcloths ; and if the Virgi- 
nians did the same, each country would be supplied at 
home, and the expense of conveyance of the two cargoes 
exchanged would be saved. 

Mrs B. If we could raise tobacco at as little 
expense as it is done in Virginia, and the Virginians 
could manufacture broadcloths as cheap as they can 

1084. Are the goods exchanged in trade of equal value? 1085. 

How can the country derive any accession of wealth from such 

traffic ? 1086. By what example is this illustrated .?-; 1087. 

Can the English raise tobacco with as little expense as it is done in 
Virginia ? 

24 



278 ON FOREIGN TRADE. 

purchase them of us, your argument would be just ; but 
that is not the case. To make this clear to you, let us 
examine what quantity of labor is bestowed upon the 
production of these'^several commodities. If the broad- 
cloth which we send to Virginia cost us the labor of one 
man, we will say for 1000 days, while the tobacco 
which we receive in exchange would have cost us 2000 
days' labor to produce at home, do we not save a thou- 
sand days' labor ? and is not the advantage to the Virgi- 
nians similar, if the tobacco which cost them 1000 days' 
labor to raise will exchange for English broadcloth, 
which they could not have manufactured under 2000 
days' labor ? 

Caroline. By such an exchange, then, each country 
saves 1000 days' labor? 

Mrs B. Yes ; and to save is to gain ; for the thou- 
sand days' labor thus economized are employed in the 
production of some other commodity, which is so much 
clear gain to each country. 

Caroline. Then each country procures the commo- 
dity it wants at half the expense which would have been 
required to produce it at home ? 

Mrs B. Just so. To put the question in other 
words, we may say, if by the employment of 50,000Z. in 
the Virginia trade we can obtain as much tobacco as 
would require 100,000Z. if cultivated at home, there is 
50,000Z. economized, which v/ill be employed in pro- 
ducing something else. The advantages of foreign com- 
merce, it is true, are seldom carried so far as a saving 
of half the expenses of production; but they must 
always exist in a greater or less degree ; for it is evident 
that no nation will purchase from abroad, what can be 
produced equally cheap and good at home. 



10S8. How is this illustrated by example ? 1089. By such 

an exchange how many day's labor would each country sa^^ ? 

1090. Does each country procure the coram,odity it wants athalf the 

expense which would be required to produce it at home ? 1091. 

Are the advantages of foreign commerce carried so far as to save 
half the expenses of production ? 



ON rOREIGN TRADE. 279 

Caroline. When goods are equally good and cheap 
I certainly prefer buying them of shops in the neighbor- 
hood rather than at a distance, because it is more con- 
venient ; but why merchants should feel the same pre- 
ference I do not clearly see ; provided the goods they 
receive in their warehouses are of the same quality and 
price, I should think it would be immaterial to them from 
whence tliey came ? 

Mrs B. They, like you, find advantages in dealing 
with their neighbors 5 it enables them to ascertain better 
the character of the persons of whom they make their 
purchases ; it affords them the means of protecting 
themselves against imposition, and of applying a legal 
remedy in case of necessity. As long as profits are 
equal, therefore, (independently of risk) a merchant 
will always prefer employing his capital in the home 
trade ; and it is only superior profits that can tempt him 
to enter on a trade in which he is exposed to greater 
risks. You may recollect we formerly observed ihat the 
chances of gain must always be proportioned to the 
chances of loss. 

Caroline, I confess that before this explanation I 
never could comprehend how foreign trade could be a 
mutual advantage to the countries engaged in it, for I 
imagined that what was gained by the one was lost by 
the other. 

Mrs B. All free trade, of whatever description, must 
be a mutual benefit to the parties engaged in it ; the 
only difference that can exist with regard to profit is, 
that it may not always be equally divided between them. 
An opposition of interests takes place not between mer- 
chants or countries exchanging their commodities, but 

1092. How long will a merchant prefer employing his capital in 

the home trade ? 1093. To what must the chances of gain be 

proportioned ? 1094. What is the only difference that can exist 

with regard to profit ? 1095. Between whom does an opposition 

of interest take place ? 



280 ON FOREIGN TRADE. 

between rival dealers in the same commodity ; and it is 
from that circumstance probably that you have been led 
to form such an erroneous idea of commerce. Do you 
not recollect our observing, some time since, that com- 
petition amongst dealers to dispose of their commodities 
renders them cheap, whilst competition amongst purcha- 
sers renders them dear. When you make any purchase, 
are you not sensible that the greater the number of shops 
in the same neighborhood dealing in the same commo- 
dity, the more likely you are to purchase it at a low 
price f 

Caroline. Yes ; because the shopkeepers endeavor 
to undersell each other. 

Mrs B, It is therefore the interest of the dealer to 
narrow competition, whilst it is that of the consumer to 
enlarge it. Now which do you suppose to be the in- 
terest of the country at large ? 

Caroline. That of the consumer ; for every man is 
a consumer, even the dealers themselves, who, though 
they are desirous of preventing competition in their own 
individual trade, must wish for it in all other species of 
commerce. 

Mrs B. No doubt ; it is by free and open competi- 
tion alone that extravagant prices and exorbitant profits 
are prevented, and that the public are supplied with 
commodities as cheap as the dealer can afford to sell 
them. 

Caroline. But in regard to luxuries, Mrs B., may 
we not be allowed to encourage those of our own pro- 



1094. What is tiie only difference that can exist with regard to 

profit ? 1095. Between whom does an opposition of interests take 

place ? 1096. Why is it that when you make a purchase you are 

more likely to obtain it at a low price, when there are in the same 
neighborhood a great number of shops dealing in the same commodi- 
ty ? 1097. Which is the interest of the country at large ? 1098. 

By what is it that extravagant prices are prevented? 1099. 

May we not be allowed to encourage the luxuries of our own pro- 
duction in preference to those other countries ? 



ON FOREIGN TRADE. 281 

ductlon in preference to those brought from foreign 
countries ? 

Mrs B, The commercial state of France during 
Bonaparte's system of prohibition will furnish a very 
satisfactory answer to your question. The West Indian 
produce, which the French were prohibited from pur- 
chasing, consists chiefly of certain luxuries of which they 
could not endure to be deprived ; so that, for instance, 
they were employed, at an immense expense of capital, 
in extracting a saccharine juice from various fruits and 
roots to answer in an inferior degree the purpose of 
sugar ; they cultivated bitter endives, the root of which 
supplied them with a wretched substitute for coffee ; 
their tea was composed of indigenous herbs of a very 
inferior flavor to that of China. In a word, labor was 
multiplied to produce commodities of inferior value ; or 
they would have been altogether deprived of a variety 
of comforts to which they had been accustomed, and 
which, besides the pleasure derived from the enjoyment 
of them, we have observed to be one of the strongest in- 
citements to industry. 

But the privation of the consumers of luxuries is but 
a trifling evil compared with the consequences of such 
restrictions upon the laboring classes ; for its effect is to 
inrcease the difficulty of i-aising produce, and, conse- 
quently, to diminish the quantity of capital, the fund 
upon which the poor subsist. 

M. Say, who witnessed all the pernicious effects of 
this system, thus expresses himself: " C'est un bien 
mauvais calcul que de vouloir obliger la zone temperee 
a fournir des produits a la zone torride. Nos terres 
produisent peniblement en petite quantite, et en qualite 
mediocre, des matieres sucrees et colorantes, qu'un 



1100. What is the privation to consumers of luxuries compared 
with the consequences of such restrictions upon the laboring 

classes ? 1101. What opinion is given by M. Say upon this 

subject ? 

24* 



282 ON FOREIGN TRADfi. 

autre clirnat donne avec profusion ; mais elles produlsent, 
au contraire avec facilite, des fruits, des cereales que 
leur poids et leur volume ne permettent pas de tirer de 
bien loin. Lorsque nous condamnons nos terres a nous 
donner ce qa'elles produisent avec desavantage aux de- 
pends de ce qu'elles produisent plus volontiers ; lorsque 
nous achetons fort cher, ce que nous payerions a fort 
bon marche, si nous ie tirions des lieux ou il est produit 
avec avantage, nous devenons nous memes victimes de 
notre propre folic. Le comble de Fhabilite est de tirer 
le parti le plus avantageux des forces de la nature ; et Ie 
comble de la demence est de lutter centre elles ; car 
c'est employer nos peines a detruire une partie des forces 
qu'elle voudroit nous preter." 

Caroline. The prohibition of foreign commodities 
has then an effect precisely the reverse of that of ma- 
chinery ; for it increases instead of diminishing the quan- 
tity of labor ; and produces inferior instead of more 
perfect commodities. 

Mrs B. And consequently the wealth, prosperity, 
and enjoyments of a country so situated, instead of aug- 
menting would decline. Let us hear what Dr Franklin 
says on the subject of restrictions and prohibitions. 

" Perhaps in general, it would be better if government 
meddled no further with trade than to protect it, and let 
it take its course. Most of the statutes or acts, edicts, 
arrets, and placards, of parliaments, princes, and states, 
for regulating, directing, or restraining of trade, have, we 
think, been either political blunders, or jobs obtained by 
artful men, for private advantage, under pretence of pub- 
lic good. When Colbert assembled some wise old mer- 
chants of France, and desired their advice and opinion 
how he could serve and promote commerce ; their an- 
swer, after consultation, was in three words only, ' Lais- 

1102. What effect has the prohibition of foreign commodities ? 

1103. What opinion is expressed by Dr Franklin on the subject 
of restrictions and prohibitions ? 



ON FOREIGN TRADE. 283 

sez nous faire.^ It is said by a very solid writer of the 
same nation, tliat he is well advanced in the science of 
politics who knows the full force of that maxim, pas trop 
gouverner, which perhaps would be of more use when 
applied to trade, than in any other public concern. It 
were therefore to be wished, that commerce were as 
free between all the nations in the world, as between the 
several counties of England. So would all, by mutual 
communication, obtain more enjoyment. Those coun- 
ties do not ruin each other by trade, neither would the 
nations. No nation was ever ruined by trade, even seem- 
ingly the most disadvantageous. Whenever desirable 
superfluities are imported, industry is thereby excited 
and superfluity produced." 

Caroline. Well, I abandon the exclusive use of Eng- 
lish luxuries ; but the very argument you have used 
against them makes me think that it must be advisable to 
rely on home produce for the necessaries of life. Were 
we dependent on foreign countries for a supply of corn, 
what would become of us if those countries, in time of 
war, prohibited its exportation ? 

Mrs B. Your question will lead us into a discussion 
on the corn-trade, which it is too late for us to enter up- 
on today ; we will, therefore, reserve it for our next 
meeting. 



CONVERSATION XX. 

CONTINUATION OF FOREIGN TRADE. 

On the corn trade. — Consequences of depending upon a 
home supply of corn in countries of great capital and 
population. — It produces high prices in ordinary 

1104. What farther is mentioned by a French writer ? 1105. 

"What therefore is to be wished regarding commerce among all 

nations ? 1106. Was any nation ever ruined by trade ? 

1107. What is the subject of the twentieth conversation ? 



284 ON FOREIGN TRADE. 

seasons, and great fluctuation of prices in times of 
scarcity and of abundance. — Why this is not the case 
in newly settled countries. — Propriety of free trade 
in general. — Danger of introducing a new branch of 
industry 'prematurely. — Extract from Mirabeau^s 
Monarchic Prussieyme on the advantages of free 
commercial intercourse. 

MRS B. 

When we last parted, you expressed a wish that we 
should raise all our corn at home, in order to be com- 
pletely independent of the casualties attending a foreign 
supply. 

Caroline. Yes ; for were we at war with those 
countries which usually furnished us with corn, they 
would withhold the supply. Or, should they experience 
a dearth, they would no longer have it in their power to 
send us corn. 

Mrs B. We occasionally import corn from different 
parts of America, from the shores of the Baltic, and 
those of the Mediterranean seas. Now it is very im- 
probable that w^e should be in a state of wai'fare with 
those various countries at the same period of time, or 
that they should all be afflicted with a dearth of pro- 
duce in the same season. There is much greater 
chance of a scarcity prevailing in any single country 
than in every part of the world at once ; and should we 
depend wholly on that country for our supply, where 
would be our resource in case of a deficiency ? 

Caroline. Under such circumstances it would cer- 
tainly be right to import corn ; I object only to doing so 
habitually, and not depending, in ordinary times, on the 
produce of our own country. 

1108. Why would it seem expedient to be independent of the cas- 
ualties attending a foreign supply ? 1109. From what places is 

corn occasionally imported ? 1110. What is it improbable to 



ON FOREIGN TRADE. 285 

Mrs B. If we apply to corn countries only in sea- 
sons of distress, we shall find it very difficult to obtain 
relief. Those countries raise corn expressly for the na- 
tion which they usually supply with that article ; but they 
will have but little to spare for a new customer, who, 
from a dearth at home, is compelled to seek for food 
abroad ; and we could obtain it only by outbidding other 
competitors. The supply, therefore, would be both 
scanty, and at a price which the lower ranks of people 
could ill afford to pay ; so that there would be a great 
distress if not danger of a famine. 

Caroline. To prevent such a calamity we have only 
to raise so large a quantity of corn at home as will afford 
a plentiful supply in years of average produce ; then in 
seasons of abundance we have the resource of exporta- 
tion, and in bad seasons we might still have a sufficiency. 

Mrs B. It is impossible to raise at all times a suffi- 
ciency without having often a superfluity. This is par- 
ticularly the case with corn, as it is the most variable of 
almost all kinds of agricultural produce. If, therefore, 
we wish to raise such a quantity as will always secure 
us against want, we must in common seasons have some 
to spare, and in abundant years a great superfluity. 

Now the more corn land we cultivate, the higher will 
the price of corn be in average seasons. You start, 
Caroline; but paradoxical as this may appear, if you 
reflect upon the causes which occasion the regular high 
price of corn ; independently of the variations of supply 
and demand, you will understand it. 

The more corn is grown in a country, the greater will 
be the quantity of inferior land brought into cultivation, 
in order to produce it; and the price of corn, you know, 
must pay the cost of its production on the worst soil in 

1111. If we apply to corn countries in seasons of distress only, 

why should we find it difficult to obtain relief? 1112. In what 

proportion will the price of corn be raised ? 1113. What must 

the price of corn pay ? 



286 ON FOREIGN TRA.DE. 

which it is raised,* otherwise it would cease to be pro- 
duced. If, therefore, in order to insure a home supply, 
we force an ungrateful soil, at a great expense of capi- 
tal, to yield a scanty crop, we raise the price of all the 
corn of the country to that standard, and we thus enable 
the landed proprietors to increase their rents. — By en- 
hancing the price of the first necessaries of life we raise 
the rate of wages, in order to enable the laboring classes 
to live ; and we raise the price of all manufactured goods, 
the produce of their labor. 

Caroline. This is indeed a long catalogue of ruinous 
consequences. 

Mrs B. Nor is this all ; when the home supply 
proves superabundant, what is to become of it ? The 
unnatural high price at which it usually sells in our 
market, owing to the forced encouragement given to 
agriculture, renders it unsaleable in foreign markets until 
the price is fallen so low as to be ruinous to farmers. 

Caroline. I cannot easily bring myself to look upon 
a superfluity of the necessaries of life as a calamity ;— if 
it is injurious to the farmer, what an advantage it is to 
the lower classes of people ! 

J\Irs B. The advantage is of a very temporary 
nature. The farmer who cultivates poor land in hopes 
of a remunerating price, must be ruined if he continues 
to cultivate at the low price occasioned by superfluity ; 
he will therefore throw up the inferior lands, and the 
consequence will be that less corn will be produced in 
succeeding years than is requisite for the supply ; and 
* See conversation on Rent. 

1114. How are the landed proprietors enabled to increase their 
rents ? 1115. Why do we enhance the price of the first neces- 
saries of life? 1116. When the home supply proves super- 
abundant, what is to become of it ? 1117. What is the nature 

of the advantage to the lower classes from asuperfluity of the neces- 
saries of life ? 1118. What would be the consequence to the 

farmer ? 



ON FOREIGN TRADE. 287 

the superfluity will be succeeded by dearth or famine. 
Thus the price of corn will be continually fluctuating 
between the low price of a glutted market and the high 
price of scarcity. 

A redundance of the necessaries of hfe is in some re- 
spects attended with more pernicious consequences than 
the excess of any other species of commodity. If the 
market were overstocked with tea and coffee, those ar- 
ticles would fall in price, and would not only be more 
freely consumed by the people accustomed to enjoy 
them, but the reduction of price would bring them within 
reach of a lower and more extensive class of people. 
Now this cannot happen with bread, because it is al- 
ready the daily and most common food of the lowest 
ranks of society ; and though in seasons of great plenty 
they may consume somewhat more than usual, the dif- 
ference will not be very considerable ; they will rather 
avail themselves of the cheapness of bread to devote a 
larger share of their wages to other gratifications ; they 
will eat more meat, drink more spirits, or wear better 
clothes. The superabundance of corn will therefore 
remain in the granary of the farmer, instead of supply- 
ing him with the means of carrying on the cultivation of 
his land ; the laborers who raised that corn will probably 
be driven to the parish for want of work, and the conse- 
quences which will ensue to the community who would 
have been fed by the fruits of their industry, it is easy 
to conceive. 

Caroline, But do you then regard a low price of 
corn, under all circumstances, as an evil. 

Mrs. B. Oh the contrary, I consider it in general as 
highly advantageous ; it is attended with injurious con- 
sequences only when it will not remunerate the farmer. 
But wlien corn can be raised at a small expense, it can 

1119. With what is a redundance of the necessaries of life 
sometimes attended? 1120. Can this happen with bread ? 

1121. What will become of the superabundance of corn? 

1122. What answer does Mrs B. make to this question — Do you 
consider a low price of corn, under all circum?tances, as an evil ? 



S88 ON FOREIGN TRADE. 

afford to be sold at a low price. It is this which ren- 
ders it desirable to bring only good land under tillage, 
and not to force poor soils to yield scanty and expensive 
crops. 

Countries that have plenty of good land and but little 
capital find no branch of industry so advantageous as the 
productions of agriculture ; and the exportation of corn 
we have observed, is their first attempt at foreign com- 
merce. Thus America, being a newly settled country, 
and as yet but thinly inhabited, has great choice of fine 
soils, and can raise corn at a very small expense of pro- 
duction ; accordingly we find that she not only feeds 
her own population, but regularly exports corn. 

Old established countries, on the contrary, such as 
England, whose population is too great to be maintained 
by the produce of her good soils, will find it answer bet- 
ter to import some portion of the corn they consume, 
and to convert their inferior lands into pasture. This 
would not only lower the price of bread, but also that of 
meat, milk, butter, and cheese, the supply of which 
would be increased by the conversion of corn land into 
pasture. When the home crops proved abundant, they 
would import less : when scanty, they would import 
more. Thus without difficulty they would proportion 
the supply to the demand, and keep both bre^ and 
wages steadily at moderate prices. 

Caroline. But with the additional expenses of 
freight and insurance, can w^e import corn from Ameri- 
ca cheaper than we can produce it at home ? 

Mrs B. In ordinary seasons we certainly can ; but 
not at the present price of corn. 

Caroline. And do you suppose that the present low 

1123. In what countries is agriculture an advantageous branch 

of industry ? 1124. What is mentioned v/here this is the fact ? 

1125. Yfhatis said of old countries, such as England, in relation 

to this subject ? 1126. ¥/hat advantage would result from im- 
portation of agricultural products into such countries? 1127. 

What question does Caroline ask as to expense of corn imported 
into England from America ?~ — 1128. What reply is made ? 



ON FOREIGN TRADE. 289 

price of corn, and the distressed state of agriculture, are 
owing to our producing too much corn at home. 

Mrs B. 1 have no doubt but that is one of the 
causes, but it is connected with many others, which 
render the question so confiplicated and intricate that we 
must leave it to wiser heads than our own to unravel it. 

The system of growing a home supply of corn, in 
countries where great capital affords the means of main- 
taining a very large population, is attended not only 
with the disadvantage of keeping the price of corn high, 
in average seasons, but likewise occasions greater fluctu- 
ations of price, in times of dearth or abundance, than if 
those casualties were diminished by a free corn trade 
with other countries. It would perhaps be difficult to 
say whether we have suffered most from a high or a low 
price of corn, within these last twenty years ; but we 
have acquired sufficient experience of the evils arising 
from both these extremes to think, that the wisest mea- 
sures we could pursue, would be to adopt such as would 
prevent great fluctuations of price. 

Nothing is more injurious to the interests of the labor- 
ing classes, than great and sudden fluctuations in the 
price of bread ; they are either distressed by unexpected 
poverty, or intoxicated by sudden prosperity ; but if 
that prosperity is the effect but of one fruitful season, it 
gives rise to expenses they are unable to maintain. It 
is but a gleam of sunshine on a wintry day, and the buds 
it untimely developes are nipped by the succeeding frost. 

Caroline. Well, Mrs B., I see that you will not allow 
of any exception in favor of the corn trade, and that I 
must consent to admit of the propriety of leaving all trade 
whatever perfectly free and open. 

1129. Is the low price of corn in England and depressed condition 

of agriculture there owing to the great quantity raised? 1130. 

How might the great fluctuations in the price of corn there be pre- 
vented ? 1131. What does Mrs B. say it would be difficult to 

decide ? 1132. How are laborers affected by great and sudden 

fluctuations in the price of bread ? 
25 



290 ON FOREIGN TRADE. 

Mrs B. That is certainly the wisest way. Instead 
of struggling against the dictates of reason and nature, 
and madly attempting to produce everything at home, 
countries should study to direct their labors to those 
departments of industry for which their situation and 
circumstances are best adapted. 

Caroline. Yet you must allow me to observe, that 
tiiere are numerous instances of our having established 
flourishing manufactures of goods which we formerly 
procured entirely from foreign commerce ; such, for 
instance, as china-ware, muslins, damask linen, and a 
variety of others. Now, does not this imply that we 
may sometimes direct our labor to a new branch of in- 
dustry, with greater advantage than by importing the 
goods from foreign countries ? 

Mi's B. It certainly does ; and it shows also, that 
as soon as we are able to cultivate or fabricate the com- 
modities we have been accustomed to procure from 
foreign parts as cheap as we can import them, we never 
fail to do so. But the period for the introduction of 
any new branch of industry should be left to the experi- 
ence and discretion of the individuals concerned in it, 
and not attempted to be regulated or enforced by go- 
vernment. James I. attempted to compel his subjects 
to dye their woollen cloths in this country, instead of 
sending them to the Netherlands, as had been the usual 
practice ; but the English dyed woollen cloths proved 
both of worse quality, and dearer than those of the Ne- 
therlands, and Jatnes was obliged to abandon his plan. 
Had the sovereign not interfered, dyers would have es- 

1133. What does Mrs B. say nations should study to do ? 

1134. What articles does Caroline mention, now manufactured by 
the British, which were formerly procured from other countries ? 
— 1135. What question does she then ask ? — 1136. What does Mrs 

B. say that this shows ? 1137. By what should it be determined 

when any new branch of industry should be introduced into a coun- 
try ? 1138. What fact is mentioned of James I. to show the folly 

of compulsory measures in relation to this subject ? 



ON FOREIGN TRADE. 291 

tablished themselves in this country as soon as the people 
had acquired sufficient skill to undertake the business ; 
but the discouragement produced by an unsuccessful 
attempt probably retarded the natural period of adopt- 
ing it.^ . . 

If it were possible for a country both to cultivate and 
manufacture all kinds of produce with as little labor as it 
costs to purchase them from other countries, there would 
be no occasion for foreign commerce ; but the remarka- 
ble manner in which Providence has varied the produc- 
tions of nature in different climates, appears to indicate 
a design to promote an intercourse between nations, even 
to the most distant regions of the earth ; an intercourse 
which would ever prove a source of reciprocal benefit 
and happiness, were it not often perverted by the bad 
passions and blind policy of man. 

Caroline. And independently of the diversity of soils, 
climates, and natural productions, 1 do not suppose that 
it would be possible for any single country to succeed in 
all branches of industry, any more than for a single indi- 
vidual to acquire any considerable skill in a great variety 
of pursuits? 

Mi's B. Certainly not. The same kind of division 
of labor which exists among the individuals of a commu- 
nity, is also in some degree observable among different 
countries; and when particular branches of industry are 
not formed by local circumstances, it will generally be 
found the best policy to endeavor to excel a neighboring 
nation in those manufactures in which we are nearly on 
a par, rather than to attempt competition in those in 
which by long habit and skill they have acquired a de- 
cided superiority. Thus will the common stock of pro- 

1139. AVhen does Mrs B. say there would be no occasion for 

foreign commerce ? 1140. What inference does she draw from 

Providence upon the subject? 1141. What comparison is made 

as to division of labor among nations ? 1142. What does Mrs 

Jl. say will generally be found best as to this division of labor ? 



292 ON FOREIGN TRA.r>E. 

ductions be most improved, and all countries most bene- 
fited. Nothing can be more illiberal and short-sighted 
than a jealousy of the progress of neighboring countries, 
either in agriculture or manufactures. Their demand 
for our commodities, so far from diminishing, will always 
be found to increase with the means of purchasing them. 
It is the idleness and poverty, not the wealth and indus- 
try of neighboring nations, that should excite alarm. 

Caroline. A tradesman would consider it more to 
his interest to set up his shop in the neighborhood of 
opulent customers than of poor people who could not 
afford to purchase his goods; and why should not coun- 
tries consider trade in the same point of view? 

Mrs B. Mirabeau, in his " Monarckie Prussienne,^^ 
has carried this principle so far, that it has made him 
doubt whether the trade of France was injured by the 
revocation of the edict of Nantz, which drove so many 
skilful manufacturers and artificers out of the country. 

" II est en general un principe sur en commerce ; plus 
vos acheteurs seront riches, plus vous leur vendrez ; ainsi 
les causes qui enrichissent un peuple augmente toujours 
I'industrie de ceux qui out des affaires a negocier avec 
lui. Sans doute c'est un deniencefrenetique de chasser 
200,000 individus de son pays pour enricher celui des 
autres ; mais la nature qui veut conserver son ouvrage ne 
cesse de reparer par des compensations insensibles, les 
erreurs des hommes, et les fautes les plus desastreuses 
ne sont pas sans remedes. La grande verite que nous 
offre cet example memornble, c'est qu'il est insense de 
detruire I'industrie et le commerce deses voisins, puis- 
qu'on aneantit en meme terns chez soi meme ces tresors. 
Si de tels efforts pouvoient jamais produire leur efFet, ils 
depeupleroient le monde, et rendroient tres infortunee la 
nation qui auroit eu le malheur d'engloutir toute i'indus- 

1143. What does she say would be most illiberal? 1144. What 

should most excite alarm? 1145. What French writer is 

quoted ? -1146. Vfhat sentiment has he expressed ? 



ON FOREIGN TRADE, 293 

trie, tout le commerce du globe, et de vendie tonjours 
sans jamais acheter. Heureusement la Providence a 
tellement dispose les chose que les delires des souverains 
ne sauroient arreter entierement ses vues de bonheur 
pour notre espece." 

Caroline, The more I learn upon this subject, the 
more I feel convinced that the interests of nations, as well 
as those of individuals, so far from being opposed to each 
other, are in the most perfect unison. 

Mrs B, Liberal and enlarged views will always lead 
to similar conclusions, and teach us to cherish sendments 
of universal benevolence towards each other ; hence the 
superiority of science over mere practical knowledge. 



CONVERSATION XXI. 

SUBJECT OF FOREIGN TRADE CONTINUED. 

Of hills of exchange. — Of the balance of trade. — Cause 
of the real variation of the exchange. — Dispropor- 
tion of exports and imports. — Cause of the nominal 
variation of the exchange, — Depreciation of the 
value of the currency of the country. 

MRS B. 

I HOPE that you are now quite satisfied of the advan- 
tages which result from foreign commerce ' 



Caroline. Perfectly so ; but there is one thing that 
perplexes me. In a general point of view I conceive 
that trade consists in an exchange of commodides ; but 
I do not understand how this exchange takes place be- 

1147. Of what does Caroline feel convinced? 1148. What 

will teach us to cherish sentiments of universal benevolence 

towards each other? 1149. With what is Caroline perplexed 

in regard to foreign commerce ? 
25* 



294 ON FOREIGN TRADE. 

tvveen merchants. The w'me merchaDt, for Instance, 
who imports wine from PortLigal, does not export goods 
in return for it ; his trade is confined to the article of 
wine f 

Mrs B. There are many general merchants who 
both export and import various articles of trade. Thus 
the Spanish merchant, the Turkey merchant, and the 
West Indian -merchant, import all their different com- 
modities which we receive from those countries, and 
generally export English goods in return. It is, how- 
ever, the countries, rather than the individuals, who ex- 
change their respective productions ; for both the goods 
exported and imported are in all cases bought and sold, 
and never actually exchanged. 

Caroline. But since the merchants of the respective 
countries do not literally exchange their goods, they 
must each of them send a sum of money in payment ; 
and these sums of money will be nearly equivalent. If 
the London merchant has J 000/. to pay for wines at 
Lisbon, the Lisbon merchant will have nearly the same 
sum to pay for broadcloth in London. It is to be re- 
gretted, therefore, that the goods should not be actually 
exchanged, or that some mode should not be devised 
of reciprocally transferring the debts, in order to avoid 
so much useless expense and trouble. 

Mrs B. Such a mode has been devised, and these 
purchases and sales are usually made without the inter- 
vention of money, by means of written orders called 
bills of exchange. 

Caroline. Is not then a bill of exchange a species of 
paper money like a bank note ? 

Mrs B. Not exactly ; instead of being a promissory 

1150. Who are called general merchants? 1151. Why is it 

the countries rather than the individuals that exchange their re- 
spective productions ? 1152. How does Caroline say these 

exchanges must be made ? 1153. "What does she say is to be 

regretted ? 1154. What substitute it there for the intervention 

of money in these exchanges? 



ON FOREIGN TRADE. 296 

note, it is an order addressed to the person abroad to 
whom the merchant sends his goods, directing him to 
pay the amount of the bill, at a certain date, to some third 
person mentioned in the bill. Thus, when a woollen 
merchant sends broadcloths to Portugal, he draws such 
a bill on the merchant to whom he consigns them; but 
instead of sending it with the goods to Portugal, he 
disposes of it in London: that is to say, he inquires 
whether any person wants such a bill for the purpose of 
discharging a debt in Portugal. He accordingly applies to 
some wine merchant who owes a sum of money to a mer- 
cantile house at Lisbon for wines imported from that 
country, and who finds it convenient to avail himself of this 
mode of payment in order to avoid the expense of send- 
ing money to Portugal. He therefore gives the woollen 
merchant the value of his bill, and having his own name 
or that of his correspondent in Portugal inserted in the 
bill as the third person to whom the amount of the bill is 
to be paid, transmits it to his correspondent in Portugal, 
who receives the money from the person on whom it is 
drawn. 

Caroline. The same bill then is the means of pay- 
ing for both commodities, the broadcloth and the wine ; 
and it supersedes the necessity of transmitting two sums 
of money for that purpose. A bill of exchange is a most 
convenient and economical contrivance, and I feel very 
much inclined to avail myself of it. A friend of mine 
at York owes me a sum of money for purchases I have 
made for her in London ; and my sister Emily is in- 
debted about the same sum to a glover at York. I 
might, therefore, draw a bill of exchange on my friend, 
which Emily would buy of me and forward it to the 

1155. What is a biir of exchange? 115$. What case is 

supposed of the English woollen merchant, who draws a bill on a 
merchant in Portugal, in illustration of this mode of payment of 
debts ? 1157. Of what do bills of exchange supersede the neces- 
sity? 1158. In what way does Caroline propose to avail herself 

of the advantacje of bills of exchange ? 



296 ON FOREIGN TRADE. 

glover at York, for the purpose of discharging her debt 
for the gloves; and he would receive the money from 
my friend, on whom it v^as drawn. It is, if I understanil 
you right, by such transfers of debts that commodities 
are really exchanged between merchants ? 

Mrs B. I am glad to see that you understand the 
use of a bill of exchange so well. It will therefore be 
evident to you that if, when two countries are trading 
together, the value of the goods exported and imported 
be equal, the amount of the bills of exchange in pay- 
ment of those goods will be so likewise ; and the debts 
will be mutually settled without the necessity of trans- 
mitting money. 

Caroline. That is quite clear : but it must, I sup- 
pose, frequently happen, that the value of the goods 
exported and imported is not equal, and in that case the 
bills of exchange will not settle the whole of the respec- 
tive debts, and some balance or sum of money will re- 
main due from one country to the other. 

Mrs B. This is called the balance af trade. In 
order to explain to you in what manner such a debt is 
settled, let us take, for example, our trade with Russia : 
— if, in trading with that country, our exports and im- 
ports are exactly equal in value, the exchange between 
Russia and England is said to be at par, or equal. 

But if the value of our imports should have exceeded 
our exports, so that, for instance, we should have receiv- 
ed more hemp and tallow from, than we have sent 
broadcloths and hardware ^o Russia, there Will be a 
greater amount of bills drawn by Russian merchants on 
England, than by English merchants on Russia. After 

1159. "What does Mrs B. say would be evident to Caroline in 

relation to this subject ? 1160. What does Caroline suppose 

frequently happens ? 1161. "When a balance of money is due 

from one country to another, what is it called ? 1162. When is 

the exchange between two countries said to be equal or at par ? 

1163. What case of exchange is supposed between England and 
Russia, where it is not at par or equal ? 



ON FOREIGN TRADE. 297 

their reciprocal debts are settled, therefore as far as the 
bills will enable them to do so, there will remain a sur- 
plus of Russian bills drawn on England, which will 
require to be paid in money. 

Caroline. Then some of our merchants will be under 
the necessity of sending money to Russia in payment of 
their debts. 

Mrs B. This every merchant endeavors to avoid, on ac- 
count of the heavy expenses of freight and insurance of the 
money ; as soon, therefore, as there appears to be a scar- 
city of English bills on Russia, every English merchant 
who is indebted to that country for hemp and tallow is 
eager to procure them. The competition of merchants 
for these bills raises their price, for they find it answer 
to give something more than the amount of the bill, 
rather than send gold to Russia. The sum thus given 
for a bill above its amount is called a premium, and our 
exchange with Russia is, in this case, said to be unfa- 
vorable^ or below par. 

Caroline. That is to say, that a man who owes a 
sum of money to Russia, must give something more 
than the, amount of the debt in order to pay it ? 

MrsB. Yes ; and the amount of the premium given 
depends, of course, on the degree of scarcity of the 
bills. 

Caroline. But the exchange, I suppose, can never 
fall below what it would cost to transport gold to Russia ; 
for as it is optional with our merchants to pay either in 
bills or money, if the premium on the bill were greater 
than the expense of sending money, they would prefer 
the latter mode of payment. 

Mrs B. Undoubtedly ; and as the expense of send- 

1164. What does every merchant endeavor to avoid ? 1165. 

How will he endeavor to do it? 1166. What raises the price of 

hills of exchange ? 1167. What is called a premium on a hill 

of exchange ? 1168. On what does the amount of premium 

depend? 1169. How low may exchange fall? 



298 ON FOREIGN TRADE. 

ing gold to different countries varies according to the 
distance, and to the facility Or difficulty of our intercourse 
with them, a favorable or unfavorable exchan2;e with 
those countries will vary accordingly. 

CaroUne. But the premium given for bills of exchange, 
after all, does not supersede the necessity of our paying 
the balance of debt in gold; it merely removes the 
difficulty from one individual to another; for those mer- 
chants who finally cannot obtain bills must transmit 
money in payment. 

Mrs B. I beg your pardon : an unfavorable ex- 
change in a great measure corrects itself : but this, it is 
true, requires some explanation. There are merchants 
who make it their business to trade in bills of exchange ; 
that is to say, to buy them where they are abundant 
and cheap, and sell them where they are scarce and 
dear. Thus bills of exchange become an article" of 
commerce like gold, or any other commodity. There- 
fore, when English bills on Russia are scarce, those 
merchants buy up the bills drawn by other coun- 
tries on Russia, and supply the English market with 
them. 

Caroline, But when English bills on Russia are 
scarce, there may perhaps be no surplus of bills on 
Russia in other countries to supply the English market. 

MrsB. Generally speaking, when there is a defi- 
ciency of bills on Russia in one country, there will be a 
redundancy of them in some other ; for though the 
exportations and importations of Russia with any par- 
ticular country may be unequal, her general exporta- 
tions and importations will upon the whole, nearly ba- 

1170. How does the expense of sending money from one coun- 
try to another vary ? 1171. What suggestion does Caroline 

make as to the insufficiency of bills of exchange to meet the evils 

for which they were designed.' 1172. When bills of exchange 

on any particular country become high, how is the evil corrected .' 

-1173. What further difficulty does Caroline suggest, as to ob» 

taining bills of exchange from other countries ? 



ON FOREIGN TRADE. 299 

lance each other ; because if there was a constant excess 
of inmportation, Russia would be drained of money to 
pay for it; if, on the contrary, there was an excess of 
exportations, the money received in payment would 
accumulate, and depreciate the value of the currency of 
the country. The goods which Russia purchases, there- 
fore, from foreign countries, must, upon the long run, 
be to the^ same amount as the goods which she sells in 
exchange for them ; so that if there is a balance of 
debt due to Russia from one country, there must be a ba- 
lance of debt due from Russia to another country. The 
bills of exchange, therefore, drawn by Russia on for- 
eign countries, and those drawn by foreign countries on 
Russia, will balance each other ; and it is the business 
of the dealers in bills to discover where there is a super- 
fluity, and where a deficiency of these bills, with a 
view to buy them in the one place, and sell them in the 
other. 

Caroline. If then the bill merchants instead of sup- 
plying the English market with bills on Russia, bought 
up the surplus of Russian bills on England, it would 
equally answer the purpose of paying our debt to that 
country ? 

Mrs B. Exactly. In our trade with Italy, for in- 
stance, we import large quantities of silk, olive oil, and 
various other articles, and our exportations are manufac- 
tured goods only to a trifling • amount. The exchange 
would, in this case, be so unfavorable as to reduce us to 
the necessity of exporting gold in payment for the excess 
of imports, did not the bill merchants come to our as- 
sistance. This useful class of men buy up the surplus 
of Italian bills on England, and send them for sale to 

1173. What is it the business of dealers in bills to discover ? 

1174. If the bill merchant, instead of supplying the English market 
with bills on Russia, bought up the surplus of Russian bills on Eng- 
land, would it answer the purpose of paying debts to that coun- 
try ? 1175. Give an instance of this. 1176. To what would 

this change reduce the English ? 



300 ON FOREIGN TRADE. 

Germany, France, Spain, or wherever there is a defi- 
ciency of bills on Italy, and where they will consequent- 
ly sell with profit. 

Caroline. Thus Germany, France, or Spain, dis- 
charge our debt to Italy ? 

Mrs B. Yes; provided any of those countries are 
in our debt ; otherwise, you know they would not pur- 
chase our bills of exchange. 

Caroline. One would imagine that these operations 
of the bill merchants would invariably have the effect of 
counteracting the fluctuations of exchanges, and keep 
them constantly at par. 

Mrs B. If the business of the bill merchant couM 
be transacted vvith the same celerity and regularity as 
that of the bankers in London, who meet together every 
day after the hours of business, to settle their respective ac- 
counts, it might influence the exchanges in the manner 
you suppose. But the speculations of the bill merchant 
embrace so wide a sphere, and so many circumstances 
occur in the course of trade, or of political events, by 
which the exchanges are effected, that no individual 
prudence or foresight can prevent great fluctuations. 

Caroline. Are then merchants often reduced to the 
necessity of sending abroad money in payment of foreign 
goods? 

Mrs B. Scarcely ever, I believe, excepting where 
there is a greater demand for money than for goods ; 
for independently of the operations of the bill merchants, 
there is yet another means of preventing that expense. 
When the English merchants who export goods to 
Russia, find that the excess of imports over exports pro- 

1177. Where do English merchants send them ? 1178. Will 

these countries discharge their debt to Italy } 1179. What effect 

would one imagine that the operations of bill merchants would have 

upon exchange ? 1180. How could it influence them in this 

manner ? 1181. Why does it not? 1182. Are mer- 
chants often reduced to the necessity of sending money abroad in 
payment of foreign goods .' 



ON FOREIGN TRADE. 301 

duces a scarcity of their bills on Russia, which enables 
them to sell them to the importing merchants at a pre- 
mium, such an addition to their usual profits of trade 
induces them to increase their exportations, and has, in 
fact, the effect of a bounty ; for they can now afford to 
export goods which, before, did not yield sufficient pro- 
fits to enable them to do it. Whilst, on the contrary, 
our importing merchants of Russian commodities, who 
are obliged to purchase these bills at a premium, (which 
has the effect of a duty, since it is a clear deduction from 
their profits,) will confine their importations to such 
commodities only as will leave them their usual profits, 
after deducting the premium upon the bills with which 
they were to be paid. 

Caroline. The premiums, then, which our importing 
merchants lose, our exporting merchants gain. This 
must undoubtedly have a considerable effect in encou- 
raging exportation, and restraining importation, and tend 
rapidly to restore the equality of the exchange. 

Mrs B. The evil, then, of an unfavorable exchange 
immediately gives rise to the remedy which corrects it, 
and actually tends to equalise the exports and imports. 
But in order to have completely that effect, it would be 
necessary that the country with whom the exchange is 
unfavorable should require as much of our productions 
as we do of theirs, which is not always the case. The 
unfavorable exchange, however, enables the exporting 
merchant to afford his goods abroad at a lower rate, 
because a part of his profit is derived from the premium 
on the exchange, and thus more persons abroad being 
able to purchase at the reduced price, the market for the 
goods is enlarged, and a much greater quantity consumed. 

1183. Independent of the operations of bill merchants what other 

means are there of preventing that expense ? 1184. What has 

a great effect in encouraging exportation and restraining importation? 

1185. But in order to have conjpletely that effect what would 

be necessary ?— ^ — 1186. What advantage irises from this Unfavor- 
able change ? 

26 



302 ON FOREIGN TRADE. 

Caroline* All these circumstances then together 
must nearly supersede the necessity of sending money to 
balance the account ? 

Mrs B. Very nearly so, I believe, except with such 
countries as, having mines of their own^ may be said to 
produce money. If Spain and Portugal were to retain 
all the gold and silver which they derive from their mines, 
it would fall so much in value in those countries, that no 
laws could prevent its conveyance to others, where its 
value was greater. It would be the most profitable ar- 
ticle a Spanish or Portuguese merchant could export in 
payment for the goods imported; and indeed, we find 
that they supply Europe wiib gold and silver, in the 
same manner as we supply it with the produce of our 
West Indian colonies, coffee and sugar. We have, in a 
former conversation, observed how the precious metals 
were diffused throughout all civilized nations, and the 
supply everywhere so proportioned to the demand, as 
to admit of no other variation of value than the small 
difference arisieg from the expense of bringing them 
from the mines to the different countries where they are 
wanted. 

Caroline. But have I not heard of the exchange 
having been much below what it would cost to send 
money abroad ? 

JWrs B, That is true ; but I believe it is principally 
to be ascribed to another and a totally different cause, 
which nominally influences the exchanges to a very 
great extent. We formerly observed that a depreciation 
of value of the currency of a country raises the price of 

1187. Do all these circumstances supersede the necessity of 

sending money to balance the account? 1188. With what 

exceptions ? 1189. What would be the consequence to other 

countries if Spain and Portugal were to retain all the silver and gold 

they obtain from their mines ? 1190. Would it be profitable for 

them to export it in payment for the goods imported? 1191. 

Is not the exchange sometimes below what it would cost to send 

money abroad ? 1192. What has been formely observed on the 

depreciation of the value of currency? 



ON FOREIGN TRADE. 303 

commodities in that country. Whether the depreciation 
arises from an unnecessary increase of currency, from an 
adulteration of the coin, or from any other cause, it inva- 
riably produces this effect. 

Let us suppose the currency of England to be depre- 
ciated 25 per cent; that is to say, that a sum worth 
100/. previous to the depreciation, is now really worth 
only 75/., though it retains its nominal value of 100/. 
An English bill of exchange, which represents a certain 
portion of the currency, will partake of this depreciation, 
and will no longer be equal in value to a foreign bill of 
the same amount. It would require an English bill of 
125/. to exchange for a foreign one of 100/. ; therefore, 
if before the depreciation the exchange were at par, this 
circumstance would make it immediately fall 25 per 
cent. 

Caroline. Would not the evil then be remedied by 
increasing the exports and diminishing the imports, as 
when the unfavorable state of the exchange arises from 
the unequal balance of trade ? 

J\lrs B. Certainly not. For though it is true that 
in both cases the exporting merchant can sell his bills at 
a premium, yet when this premium arises from a depre- 
ciation of the currency, it cannot be considered as any 
gain to him, because it is exactly balanced by the 
advanced price of the goods he exports, which operates 
as a loss. 

Caroline. I think I understand it. The depreciation 
of currency which produces the premium on the bill of 
exchange produces also an increase in the price of the 
merchandise, and these effects, resulting from the same 
cause, must always correspond and be felt in the same 
proportion. Thus if a merchant exports cloth to Ham- 

1193. Does it invariably produce this effect? 1194. What 

illustration is given of this ? 1195. Would the evil be remedied 

by increasing the exports, and diminishing the imports ? 1196. 

Why would it not ? 1197. What farther does the depreciation 

of currency produce ? 



304 ON FOREIGN TRADE. 

burgh which costs him 200/., whatever profits he might 
expect under the ordinary state of the currency must be 
diminished 25 per cent, in consequence of his giving 
50Z. more for his cloth than he would otherwise have 
done. Yet as he will sell the bill of exchange which he 
draws on Hamburgh for the payment of his cloth at a 
premium of 50/., his profits will remain precisely the 
same, upon the whole transaction, as if everything had 
gone on its regular way. 

Mrs B. You have explained it perfectly well. Re- 
member therefore, that when the exchange is unfavorable 
in consequence of the depreciation of the currency, it is 
only nominally^ not really unfavorable j for it may take 
place when the exports and imports are perfectly equal. 
And recollect also that the difference the exchange pro- 
duces in the sale or purchase of bills is neither a loss nor 
a gain to the parties, and that it has no effect either on 
exportation or importation. 

Caroline, But is it easy to distinguish between two 
causes which are so similar in their effects, and to ascer- 
tain at any time which of them it is that influences the 
exchange ^ 

Mrs B. Far from it : this .has been a subject of 
much discussion, particularly during the late war. If it 
be true that the currency of the country has been increased 
beyond what was required, it must be considered as 
depreciated, and as having nominally affected the 
exchange. 

On the other hand, as the system of warfare was re- 
markably unfavorable to our exportations, the balance of 
foreign debt was very much against us, and the expense 
of transmitting gold considerably increased ; — so far the 
exchange may be said to have been really unfavorable. 

1198. Illustrate this.-- — 1199. What therefore is to be remem- 
bered ? 1200. What effect has the difference of exchange on 

exportation or importation? 1201. Is it easy t;o distinguish 

between two causes so similar in their effects ? 



ON FOREIGN TRADE. 305 

It is probable that both these causes contributed to the 
very low rate of our exchange during the late war. 

Notwithstanding all the investigation which these sub- 
jects have undergone, there still prevails, even amongst 
our legislators, the old popular error respecting the 
balance of trade. Even at this day we find persons 
congratulating the country, that the exports exceed the 
imports, and that in consequence a balance of money 
remains due to us, which is considered as so much gain 
to the country. 

Caroline, But do those who maintain such an opinion 
know, that this money would not be due to us, unless 
we had exported a surplus of merchandise to an equal 
amount ? 

Mrs B. It is from that circumstance they conceive 
the advantage arises. They assert that since the poor 
are maintained by labor, the more work we perform for 
other countries, and the more money we receive for our 
work, the richer we must be. 

Caroline. Not if we export the fruits of their labor 
and receive only gold in return : for the poor are main- 
tained, not by the act of labor, but by its produce; and 
if all the produce were exported, and nothing but gold 
received in exchange, we should be much in the situa- 
tion of king Midas, who was starved because everything 
he touched was converted into gold. 

But do not the bill merchants prevent this importa- 
tion of gold, by transferring the bills of exchange from 
one country to another ? for if our balance of trade is 
favorable with one country, it must be unfavorable with 
another. 

Mrs B. No doubt they do. If it were possible to 

1202. What erroneous opinion is still held concerning the balance 

of trade ? 1203. From what circumstance is it conceived that the 

advantage arises ? 1204. What is asserted .' 1205. In what 

situation should we be placed if nothing but gold was exported ? 

1206. Do not bill merchants prevent this importation of gold by 
transferring bills of exchange from one country to another? 

26* 



306 ON FOREIGN TRADE. 

have what is called a favorable balance of trade with 
every country, we should accumulate a quantity of the 
precious metals which would answer no other purpose 
than to depreciate our currency. 

The most advantageous trade for both parties con- 
cerned is, when the exports and imports are equal, so 
that the balance does not preponderate on either side ; 
for it is as injurious to one country to part with money 
which is wanted at home for the purposes of currency, 
as it is to the other to receive it when it is not wanted. 

When a country receives bullion, it should not be in 
payment of a balance of debt, but as a commodity for 
which there is a demand. This demand will always 
take place in thriving countries, not only because gold 
and silver bullion are wanted by jewellers and silver- 
smiths for the purpose of luxury ; but also because, as 
the saleable produce of the country increases, an addi- 
tional quantity of currency is required for its circulation. 

Caroline. According to this theory of the balance of 
trade, it should always be against Spain and Portugal, 
and favorable to every other country ; because it is 
through Spain and Portugal that all the treasures of the 
new world flow into Europe. 

Ms B. True ; but they are not sent immediately 
from those countries to the most distant parts of Europe, 
but are transferred through the intermediate countries. 
Thus France sends Louis to Geneva to pay for the 
watches she imports from that place ; or to Italy, 
in payment of raw silks, olive oil, &c. So that the 
countries most distant from Spain and Portugal would 
constantly have what is absurdly called the balance of 
trade in their favor : whilst the intermediaie countries 
would have it favorable with those which were nearer 

1207. What is the most advantageous trade for both parties con- 
cerned ? 1208. When a country receives bu'lion should it be 

in payment of a balance of debt? 1209. Why should it not ? 

1210. According to this theory against what country should the 
balance of trade be ? 1211. Why ? 



ON FOREIGN TRADE. 307 

Spain than themselves, and unfavorable with those which 
were more distant. 

This, however, is a general principle, which, though 
true in theory, requires modification, if applied to prac- 
tice. A great variety of circumstances occasion fluctua- 
tions in the regular distribution of the wealth of Amer- 
ica. However extraordinary it may appear, it is not 
very long since we sent considerable quantities of specie 
to Spain and Portugal, to maintain our troops in those 
countries: so much does war reverse the natural order of 
things. Instead of exporting our manufactures to bring 
back gold, we were obliged to drain our circulation to 
send money in order to support our troops, whilst our 
manufacturers were either starving, or become members 
of that very army which caused liieir ruin. 

Caroline. But if Spain, from the abundance of her 
gold and silver, imports such large quantities of manu- 
factured goods, is it not a check to her industry at 
home ? 

Mrs B. It certainly is ; though not so much as you 
would imagine, because she does not obtain the gold and 
silver of America free of cost : she obtains it partly in the 
form of a tax imposed by the mother country, or rent 
for the royal mines ; and the rest by payment in produce 
of manufactured good. But these goods are not necessa- 
rily manufactured in Spain or Portugal. A Spanish mer- 
chant having imported goods from England and sent 
them to America, receives back gold and silver in pay- 
ment, which are transmitted to England if wanted there. 
Spain and Portugal being the entrepot, in consequence of 
the strict regulations by which the gold and silver are 
compelled to be brought to the mother country. 

1212. Is this general principle true in theory ? 1213. But 

what does it require before applied to practice ? 1214. If Spain 

imports such large quantities of manufactured goods, is it not a check 

to her industry at home? 1215. Does she obtain the gold and 

silver of America free of cost? 1216. How does she obtain it? 



308 ON FOREIGN TRADE. 

The want of industry in Spain, though it proceeds in 
a great measure from the nature of its religion and go- 
vernment, is also in part attributable to the effect which 
the influx of the precious metals has produced. 

In Townsend's Travels in Spain, which abound with 
philosophical observations, it is stated " that the gold and 
silver of America, instead of animating the country and 
promoting industry, instead of giving life and vigor to 
the whole community, by the increase of arts, of manu- 
factures, and of commerce, had an opposite effect, and 
produced in the event weakness, poverty, and depopula- 
tion. The wealth which proceeds from industry resem- 
bles the copious yet tranquil stream, which passes silent, 
and almost invisible, enriches the whole extent of coun- 
try through which it flows; but the treasures of the 
new world, like a swelling torrent, were seen, were 
heard, were felt, were admired ; yet their first operation 
was to desolate and to lay waste the spot on which they 
fell. The shock was sudden ; the contrast was too great. 
Spain overflowed with specie, whilst other nations were 
comparatively poor in the extreme. The price of la- 
bor, of provisions, and of manufactures, bore propor- 
tion to the quantity of circulating cash. The conse- 
quence is obvious; in the poor countries industry ad- 
vanced ; in the more wealthy it declined. 

" Even in the present day (1806,) specie being about 
6 per cent less valuable in Spain than it is in other coun- 
tries, operates precisely in the same proportion against 
her manufactures and her population." 

We may here, I think, conclude our observations on 
the principles of trade; and having now explained the 
different sources from which a rev^enue may be derived, 
we shall, at our next meeting, make a few inquiries into 
the nature and effects of expenditure. 

1217. From what does the want of industry in Spain proceed ? 

1218. What fact is stated in Townsend's travels in Spain ? 

1219. What will be the subject of the next conversation ? 



ON EXPENDITURE. 309 

CONVERSATION XXII. 

ON EXPENDITURE. 

Of the disposal of revenue. — Of the expenditure of indi- 
viduals. — Effects of consuming capital. — Increase of 
revenue of a country beneficial to all classes of peo- 
ple. — Except in cases where government interferes 
with the disposal of capital. — Of sumptuary laws. — 
Of luxury. — Industry promoted by luxury. — Pas- 
sages from Paley on luxury. — Sudden increase of 
wealth prejudicial to the laboring classes. — Passages 
from Bentham on legislation. — Luxury of the Ro- 
mans not the result of industry. — Of the disadvan- 
tages arising from excess of luxury. 

MRS B. 

I TRUST that you now understand both the manner in 
which capital is accumulated, and the various modes of 
employing it to produce a revenue. It remains for us to 
examine how this revenue may he disposed of. 

Caroline. 1 have already learnt that a revenue may 
either be spent, or accumulated and converted into cap- 
ital; and that the more a man economizes for the lat- 
ter purpose, the richer he becomes. 

Jilrs B. This observation is equally applicable to the 
capital of a country, which may be augmented by indus- 
try and frugality, or diminished by prodigality. 

Caroline. The capital of a country, I think, you 
said, consisted of the capital of its inhabitants taken col- 
lectively ? 

Mrs B. It does ; but you must be careful not to 
estimate the revenue of a country in the same manner, 
for it would lead to very erroneous calculations. Let 
us for instance suppose n)y income to be 10,000/. a 

1220. Of what does the capital o.f a country consist? 1221. 

Why cannot we estimate the revenue in the same manner ? 1222. 

What instance is given ? 



310 ON EXPENDITURE. 

year and that I pay, 500Z. a year for the rent of ray 
house — It is plain that this bOOl, constitutes a portion of 
the inconie of my landlord ; and si^ce therefore the same 
property by being transferred from one to another, may 
successively form the income of several individuals, the 
revenue of the country cannot be estimated by the aggre- 
gate income of the people. 

Caroline. And does not the sam^ reasoning apply to 
the expenditure of a country ; since the 500Z. a year 
which you spend in house rent will be afterwards spent 
by your landlord in some other manner ? 

Mrs B. True, because spending money is but ex- 
changing one thing against another of equal value ; — 
is giving, for instance, one shilling in exchange for a 
loaf of bread, five guineas in exchange for a coat ; 
instead of a shilling we are possessed of a loaf of bread ; 
instead of five guineas, of a coat ; we are therefore as 
rich before as after these purchases are made. 

Caroline. If so, how is it that we are impoverished 
by spending money. 

Mrs B. It is not by purchasing, but by consuming 
the things we have purchased, that we are impoverished. 
When we have eaten the bread and worn out the coat, 
we are the poorer by five guineas and a shilling than we 
were before. 

A baker is not poorer for purchasing a hundred sacks 
of flour, nor a clothier for buying a hundred pieces of 
cloth, because they do not consume these commodities. 

When a man purchases commodities with a view of 
reselling them, he is a dealer in such commodities, and 
it is capital which he lays out. But when he purchases 
commodities for the purpose of using and consuming 

1223. Why cannot the revenue of a country be estimated by the 

aggregate income of the people? 1224. Does the same reasoning 

apply to the expenditure? 1225. Give some instances? 

1226. If so, how is it we are impoverished by spending money ? 

1227. What is called expenditure ? 



ON EXPENDITURE. 311 

them, it is called expenditure. Expenditure therefore, 
always implies consumption. 

Caroline. I understand the difference perfectly. 
The one lays out capital with a view of reselling his 
goods with profit. The other spends money with the 
view of consuming the goods, with loss; — that is to say, 
the loss of the value of the goods he consumes. 

Mrs B, Just so. Thus, though the sum of money 
you spend will serve the purpose of transferring commo- 
dities successively from one purpose to another, yet the 
commodities themselves can be consumed but once. 

Therefore the consumption of a country may, like its 
capital, be estimated by the aggregate consumption of 
its inhabitants ; and the great question relative to the 
prosperity of the country, is, how far that consumption 
takes place productively, and how far unproductively. 

Caroline. That certainly is a very important point ; 
for in the former case it increases wealth, in the latter it 
destroys it. 

Yet, Mrs B., supposing a man were so prodigal as to 
spend not only the whole of his income, but even the 
capital itself, provided that it were spent in the mainte- 
nance of productive laborers, though it would ruin the 
individual, I do not conceive that it would injure the 
country ; for whether a man lay out his capital in the 
maintenance of productive laborers with a view to pro- 
fit, or whether he spend it in purchasing the fruits of their 
industry for the purpose of enjoyment, I can perceive no 
difference relative to the country •, in both cases an 
equal number of people would be employed, and conse- 
quently an equal quantity of wealih produced. 

Mrs B. I have a strong suspicion that the difficulty 
you feel in understanding clearly the distinction between 

122S. What does it always imply? 1229. How may the 

consumption of a country be estimated ? 1230. What is a great 

question relative to the prosperity of a country? 1231. From 

what does the difficulty in understanding the distinction between 
employment and expenditure arise ? 



312 ON EXPENDITURE. 

the employment and expenditure of capital, arises from 
confounding capital with money ? 

Caroline, Indeed 1 think not ; my notion of capital 
is, that it consists of any kind of commodity useful to 
man. 

Mrs B. Well, then, suppose that two persons are 
possessed of such commodities to the value of 5000/. 
each ; — that the one distributes them out to industrious 
workmen, furnishing them with food and materials to 
work upon, and that by the time the various commo- 
dities have been finally distributed, the workmen have 
fashioned them into objects of another form, but of supe- 
rior value to what has been consumed. Let the other 
distribute his capital amongst his servants, who in return 
amuse their employer with theatrical representations, 
fire-works, or any other species of enjoyment, which, by 
the time the commodities have been consumed, leave no 
other traces than the recollection that they have existed. 
Can you see no difference in these two instances ? 

Caroline. Oh yes ; I see a very material difTerence : 
one of the capitals of 5000/. is destroyed, and the person 
who has consumed it thus idly is reduced to beggary. 
But this is not the case I put. Let the prodigal, instead 
of consuming his capital in the way you have described, 
spend it amongst tradesmen, who will furnish him with 
articles for his enjoyment, such as magnificent apparel, 
splendid equipages, sumptuous entertainments. He will 
then replace the capital that those tradesmen have been 
consuming, in order to produce these commodities, vvhich 
capital will again be usefully employed in producing 
more. 

Mrs B. That is very true ; and so far the prodigal 
has done no harm. In spending his capital amongst 
tradesmen, he has exchanged his various commodities, 
for others of equal value, and the same quantity of capi- 

1232. What do you understand by capital? 1233. What 

illustration is given of the difference in expenditure of capital .-' 



ON EXPENDITURE. 313 

tal exists as before the exchange took place ; but what 
is the prodigal to do with the new stock that he has 
acquired ? 

Caroline. It will be applied to the gratification of his 
desires ; he will regale with his friends at the sumptuous 
feasts, he will use the equipages, and clothe himself and 
his servants in the rich apparel. 

Mrs B. Then don't you see that you have only 
removed the evil one step farther ? He and his friends 
will consume amongst servants and dependents in fetes 
and entertainments, what the tradesmen furnished him 
with, instead of that which he gave in exchange for it; 
and that as much capital will be lost to himself and to 
the community in the one case as in the other. The 
spending of capital is a steril consumption of it, whilst 
its employment is a reproductive consumption. 

Caroline. But if money were not thus spent, what 
would the tradesman do with the luxuries which he had 
prepared for the purpose of supplying the demand of 
persons who spend in order to enjoy .^ 

Mrs B. Such tradesmen would certainly find less 
employment; but you would not thence conclude that 
the community would be injured. You have already 
seen that capital cannot produce revenue unless it is 
consumed ; if it be consumed by industrious persons, 
who work whilst they are consuming it, something of 
superior value v^^ill be produced, and that product, 
whatever it miiy be, will be exchanged against other 
productions ; it will be distributed amongst another order 
of tradesmen, and will afford precisely the same amount 
of encouragement, though of a different kind. Whatever 
is saved from the extravagant consumption of the rich, 

1 234. If money were not spent in procuring luxuries, what would 
the tradesman do with those he had prepared for the demand of 
persons who spend in order to enjoy? 1235- Can capital pro- 
duce revenue unless it is consumed ? 1236. What will be the 

effect if consumed by industrious persons? 1237. What becomes 

of that portion of capital saved from the consumption of the rich ? 

27 



314 ON EXPENDITURE. 

is a stock to contribute to the comforts of the middling 
and lower ranks of society. 

Caroline. Yet how often has it been said that a 
generous and liberal expenditure, however injurious to 
the individual, was a source from which the middling 
and lower classes drew their principal nieans of subsist- 
ence. 

Mrs B. There is not a more fatal delusion in political 
economy. By such wanton extravagance as we have 
been describing, the capital, which should annually 
furnish a subsistence to laborers, is wasted and destroyed, 
and the industrious are reduced to idleness and want. 
They are covered with rags, because the prodigal has 
clothed himself in gorgeous apparel ; they wander without 
a home, because the prodigal has erected a palace; 
they must starve, because the wealth that should have 
fed them has been squandered in sumptuous feasts. 

It is easy to comprehend that the prevalence of such 
conduct in a state must be followed by the gradual decay 
of its wealth and population. 

Caroline. This is a most painful reflection ; but on 
the other hand it would not, I suppose, be possible for a 
country to make any progress in wealth by which the 
poor were not more or less benefited ? 

Mrs B. Certainly not, if things are allowed to follow 
their natural course. Where property is secure, there 
is a general tendency to accumulation of capital. The 
great majority are governed by good sense and prudence, 
and their efforts to save and better their condition more 
than counterbalance the occasional loss that arises from 
the extravagance of spendthrifts. Besides, if expen- 
diture w^ere directed in too large a proportion towards 
the production of mere luxuries, and the number of 

1238. What has been often said respecting a generous and Hberal 

expenditure ? 1239. Is the opinion just"? 1240. Why is it 

not ? 1241. W^ould it be possible for a country to make any 

progress in wealth by which the poor would not be more or less 
benefited ? 



ON EXPENDITURE. 315 

persons employed in producing them were to be increased 
without at the same time augmenting the number of 
persons employed in producing articles of subsistence, 
the same quantity of provisions must be divided amongst 
a greater number of consumers ; and as provisions, in 
consequence of being more scarce, would increase in 
price, the profits of agriculture would become so great, 
that the capital which had been applied to the production 
of luxuries would flow to the more advantageous employ- 
ment of agriculture, and thus the natural distribution of 
capital would be restored. 

Caroline. The more I hear on this subject, and the 
better I understand it, the greater is my admiration of 
that wise and beneficent arrangement which has so 
closely interwoven the interests of all classes of men ! 

Airs B. We are accustomed to trace the hand of 
Providence chiefly in the natural world, but it is no less 
conspicuous in moral life, and cannot be more strongly 
exen[)plified than in that order of things, which renders 
it essential to the interests of the rich not to turn the 
labor of the poor to the production of superfluities, until 
they have provided an ample supply of the necessaries 
of life. 

But these wise dispensations are often in a great 
measure subverted by the folly end ignorance of man. 
An injudicious interference of government, for instance, 
may give peculiar advantages to the employment of 
capital in one particular branch of industry, to the preju- 
dice of others, and thus destroy that natural and useful 
distribution of it, which is so essential to the prosperity 
of the community. 

Caroline. If ever the legislature could interfere 
with advantage, I should think it would be in some regu- 

1242. If expenditure were directed in too large a proportion 
towards the production of luxuries, what would be the consequence ? 

1243. What effect would this have on agriculture? 1244. 

What effect may an injudicious interference of government some- 
times have upon particular branches of industry? 1245. When 

does Caroline think that the legislature may interfere with advantage ? 



316 



ON EXPENDITURE. 



lations respecting expenditure. I should be strongly 
tempted to restrain the use of luxuries, in order to induce 
the owners of capital to employ it in agriculture, and 
such homely manufactures as are suited to the consump- 
tion of the poor ; such a measure could not fail to pro- 
duce a more equal distribution of the comforts of life. 

Mrs B. Sumptuary laws have been instituted with 
that view in many countries. But after all we have said 
of the benefits resulting from the natural distribution of 
capital when unrestrained and uninfluenced by political 
regulations, I am surprised at your wishes to compel 
people to enjoy it in one way rather than another. 

Caroline. But if that one way should prove the 
right way ? 

Mrs B. Then capital will follow that direction by 
its natural impulse, without requiring any foreign aid. 

Be assured that the only right way is to leave the use 
of capital to the care of those to whom it belongs 5 they 
will be the most likely to discover in what line it can be 
employed to the greatest advantage. 

Caroline. Of their own advantage they are no doubt 
the best judges; but are you sure that they will be 
equally attentive to the advantage of the poor? Sump- 
tuary laws appear to me to afford peculiar encourage- 
ment to the production of the necessaries of life. But 
the principal advantage of sumptuary laws would be to 
repress the expenditure of revenue. And since it is so 
desirable that capital should not be dissipated, surely the 
same principles will apply to revenue ; w^ould it not be 
advantageous to save that also, in order to convert it into 
capital ? 

Mrs B. Capital, you know, has arisen solely from 
savings from revenue ; but you are aware that there 
must be a limit to such savings. 

1246. Have laws ever been instituted with that view ? -1247. 

Have they been beneficial ? 124S. Which is the only right way ? 

1249. What would be the principal advantage of sumptuary laws ? 
. 1250. From what has capital solely arisen? 



ON EXPENDITURE. 



317 



Caroline. Certainly there is a limit, because we 
could not live without consuming some part of it ; but 
the less we consume, and the more we save, the better. 

Mrs B. That is pushing the principle too far : we 
accumulate wealth for the purpose of enjoying it ; and 
if by a liberal though prudent expenditure, social affec- 
tions are cultivated, and the happiness of mankind 
promoted and extended, I see no reason why we should 
be debarred from indulging in some of the best feelings 
of our nature. 

The two extremes of parsimony and prodigality are 
perhaps equally pernicious ; the one as destructive of 
the social and benevolent affections, the other as wasting 
the provision which nature has destined for the mainte- 
nance and employment of the poor. 

But there is another point of view in which sunnptuary 
laws have a dangerous tendency. By diminishing 
objects of desire you run some risk of giving a general 
check to industry. 

Tell me v/hy do the rich employ the poor ? 

Caroline. In order to derive an income from the 
profits of their labor. 

Mrs B. And what use do the rich make of this 
income ? 

Caroline. They either spend the whole, or they 
economize part in order to augment their capital. 

Mrs B. But why should they be desirous of in- 
creasing their capital ? 

Caroline. There are so many reasons for wishing to 
be rich, that I scarcely know how to enumerate them. 
The pride of wealth is a motive with some men, the 
love of independence with others ; the apprehension of 
future reverses incites a third to accumulate ; the wish 



1251. Why must there be a limit to these savings? 1252. 

In what point of view do sumptuary laws have a dangerous tenden- 
cy .' 1253. Why do the rich employ the poor ? 1254. What 

use do they make of this income ? 
27* 



318 ON EXPENDITURE. 

to increase his means of doing good stimulates the 
industry of another ; the desire of providing for a family 
and leaving them in affluence, is a powerful inducement 
with many; but the ambition of improving tlieir situation 
in life, and of increasing their enjoyments by a more 
liberal expenditure, is, I think, the most general, and 
perhaps the strongest of all the motives for accumulating 
riches. 

Mrs B. If, then, laws be enacted which restrain a 
man from spending any part of his income in luxuries, 
you take away one of his motives for vvishing to augment 
his capital ; and a growing capital is, you know, an 
increase of subsistence for the poor. 

Caroline. I would wish to prohibit only that excess 
of luxury which you have censured as pernicious. 

Mrs B. It is extremely difficult to draw the line 
between necessaries and luxuries 5 these form a scale 
which comprehends all the various comforts and conve- 
niencies of life, the graduations of which are too numer- 
ous and too minute to be distinct. We have considered 
ss necessaries whatever the rate of wages of the lowest 
ranks of people have enabled them to command ; they 
would consider as luxuries whatever they have not been 
accustomed to enjoy ; though when they can afford it 
there is no excess. 

^ Excess, I conceive, depends not so much on the 
quantity or nature of the luxury, as upon its relative 
proportion to the means of the individual. A daily mieai 
of meat is an excess of luxury to the family of a common 
laborer, because they are not used to it, and their wages 
will not enable them to com.mand it; w^hilst a table 
abounding with expensive delicacies can scarcely be 

1255. What is the strongest motive for increasing capital ? 

1256. What therefore follows ? 1257. Between what is it said 

to be extremely difficult to draw a line of distinction ? 1258. 

On what does excess depend ? 1259. What cases are mentioned 

in illustration of excess ? 



ON EXPENDITURE. 319 

called excess of luxury to a man whose income is so 
large that such gratifications do not prevent his making 
considerable savings. 

Caroline. Since then it is impossible to define what 
are and what are not luxuries, no general line of prohi- 
bition can be drawn. 

Mrs B, The ruin which extravagance entails on 
the prodigal is his natural punishment, and serves as a 
warning to deter others from similar imprudence. Any 
attempt to prevent such partial evil by sumptuary laws, 
would generally, tend to depress the efforts of industry. 
The desire of increasing our enjoyments, and of improv- 
ing our situation in life, as it is one of the strongest 
sentiments implanted in our nature, so T conceive it to 
be essentially conducive to the general welfare. It is 
the active zeal of each individual exerted in his own 
cause ', which, in the aggregate, gives an impulse to the 
progressive improvement of the world at large. The 
desire of bettering his condition is justly considered as a 
laudable disposition in a poor man, and it is a feeling 
dangerous to repress in any classes of society. 
Caroline. 

" The man of wealth and pride 

Takes up a space that many poor supplied ; 

Space for his lake, his park's extensive bounds. 

Space for his horses, equipage, and hounds : 

The robe that wraps his limbs in silken cloth. 

Has robb'd the neighboring fields of half their growth : 

His seat, where solitary sports are seen, 

Indignant spurns the cottage from the green.'' 

What can you reply to these beautiful lines, Mrs B. ? 
I fear they are but too faithful a representation of the 
state of society. 

Mrs B. I must first inquire whether this man of wealth 

1260. Why may not luxuries-be defined ? 1261. What is the 

natural punishment of the prodigal ? 1262. What evil would 

result from laws designed to restrain extravagance ? 1263. 

What is mentioned explanatory of the subject, as being one of the 

strongest sentiments planted in our nature ? 1264. What gives 

impulse to the progressive improvement of the world at large ? 



320 ON EXPENDITURE. 

and pride either spends or produces capital in order to 
procure these gratifications. If the former, he deserves 
all the censure we have bestowed upon the spendthrift. 
If the latter, his wealth may possibly be more increased 
by his industry, than diminished by his luxury. 

Caroline. In all probability he does neither ; but 
being possessed of a considerable property, he lives upon 
his income ; and such an expensive style of living must 
greatly diminish, if not wholly absorb what he might 
otherwise economize. 

Mrs B. Still I cannot approve of compulsory mea- 
sures to lessen his expenses. If it be desirable to stimu- 
late and encourage the industry of man, and induce him 
to accumulate wealth, he must be at full liberty to dispose 
of it according to his inclinations. It is unquestionably 
true that unless the rich impoverish themselves by 
spending their capital, they cannot impoverish their 
country. 

Caroline. That is not enough ; the question is, what 
are the best means of enriching their country ? 
' Mrs B. One man sits down contented with his 
little property ; brings up his children with humble views 
and desires ; and every year lays up something to 
provide for their future support in life. 

Another of a more ambitious character rises early 
and labors hard, exerting every faculty of his mind to 
turn his capital to the best account ; he likewise makes 
savings from his income, but they do not prevent his 
growing w^ealth from enabling him to spend more liber- 
ally, and enjoy more freely ; and none of his enjoyments 

1265. What reply does Mrs B. make to Caroline's poetic quota- 
tion? 1266. What objection does Caroline make to Mrs B.'s 

reply? 1267. What does Mrs B. say is necessary if we would 

stimulate and encourage a man to industry ? 1268. Without 

what does she say it is impossible for the rich to impoverish their 

country ? 1269. What does Caroline say is the proper question 

in discussing this subject? 1270. What description does Mrs 

B. give of the different views with which different persons pursue 
the business of life ? 



i 



ON EXPENDITURE. 321 

is more heartfelt, than that of having raised his family in 
the world by the exertions of his industry. 

Caroline. Every man who is striving to acquire 
wealth is certainly more or less actuated by the prospects 
of the various enjoyments which he hopes his increasing 
income will enable him to command. One wishes to 
become rich enough to marry ; another to keep a car- 
riage, or a country house ; a third to be able to settle his 
children respectably in the world. 

Mrs B. Such motives are strong incitements to 
industry and frugality 5 and these useful habits often 
remain when the cause which gave rise to them no 
longer exists ; it is far from uncommon to see men 
retain the taste for accumulating long after they have 
lost the inclination for spending. 

Dr Adam Smith observes, that before the introduction 
of refined luxuries, the English nobles had no other 
means of spendin-g their wealth, than by maintaining in 
their houses a train of dependents, either in a state of 
absolute idleness, or whose only business was to indulge 
the follies or flatter the vanity of their patron ; and this 
is in a great measure the case in Russia, Poland, and 
several other parts of Europe, even at the present day. 
We find that the consumption of provisions by the house- 
hold of an English nobleman some centuries ago was 
perhaps a hundred times greater than it is at present. 
But you must not thence infer that the estate, which 
maintained such numerous retainers, produces less now 
than it did in those times ; on the contrary, it is perhaps 
as much increased as the consumption of the household 

1271. With what motives does Caroline suppose that different 

persons labor to acquire wealth ? 1272. What does Mis B. say 

of these and similar motives ? 1273. What does she say of the 

industrious habits which grow out of them ? 1274. What does 

Adam Smith say of the manner in which the English nobles for- 
merly spent their wealth ? 1275. In what countries is this now 

the case r -1276. How does the consumption of provisions by 

the household of an English nobleman compare with what it for- 
merly was ? 



322 ON EXPENDITURE. 

is diminished. The difference is, that the produce, 
instead of supporting a number of lazy dependents, 
maintains probably a hundred times that number of 
industrious, independent workmen, part of whom are 
employed in raising the produce of the estate, and part 
in supplying the nobleman with all the luxuries he 
requires : it was to obtain these luxuries that he dis- 
missed his train of dependents, that he improved the 
culture of his. land, and that, whilst studying only the 
gratification of his wishes, he contributed so essentially 
to the welfare of his country. 

Here is a passage in Paiey's Political Philosophy on 
the subject of luxury, extremely well worth your reading. 

Caroline reads. " It appears that the business of one 
half of mankind is to set the other half at work ; that is, 
to provide articles, which by tempting the desires, may 
stimulate the industry, and call forth the activity of those 
upon the exertion of whose industry, and the application 
of whose faculties, the production of human provision 
depends. It signifies notiiing to the main purpose of 
trade how superfluous the articles which it furnishes are, 
whether the w^ant of them be real or imaginary ; whether 
it be founded in nature or in opinion ; in fashion, habit, 
or emulation; it is enough that they be actually desired 
and sought after. Flourishing cities are raised and 
supported by trading in tobacco; populous towns subsist 
by the manufacturing of ribbons. A watch may be a 
very unnecessary appendage to the dress of a peasant, 
yet if the peasant will till the ground in order to obtain a 
watch, the true design of trade is answered; and the 
watchmaker, whilst he polishes the case and files the 
wdieels of his machine, is contributing to the production 

1277. What is the difference as to the amount of produce from 

an estate, now and at the time named ? 1278. What does Paley 

say appears to be the business of one half of mankind ?— 1279. What 
does lie say is matter of no consequence in relation to this subject? 

1280. How does he say that the watchmaker and fisherman 

contribute to the promotion of agriculture ? 



ON EXPENDITURE. 323 

of corn, as effectually, though not so directly, as if he 
handled the spade or the plough. If the fisherman will 
ply his nets, or the mariner fetch rice from foreign coun- 
tries, in order to procure the indulgence of the use of 
tobacco, the market is supplied with two important 
articles of provision by the instrumentality of a merchan- 
dise which has no other apparent use than the gratification 
of a vitiated palate." 

This reminds me of an anecdote in Dr Franklin's 
works. He describes the admiration which was excited 
by a new^ cap worn at church by one of the young girls 
of Cape May. This piece of finery had come from 
Philadelphia ; and with a view of obtaining similar orna- 
ments, the young girls had all set to knitting worsted 
mittens, an article in request at Philadelphia, the sale of 
which enabled them to gratify their wishes. 

Mrs B. We often hear the poor reproached for 
aiming at things above their situation ; but J own that I 
delight in seeing them strive to ornament their cottages, 
to raise a few flowers amongst the nutritious vegetables 
in their gardens, to deck their room, though it be but 
with rows of broken china, cups, and plates, or a few 
gaudy prints ; it shows a desire of creditable appear- 
ance, and of aiming at something beyond the bare means 
of subsistence. 

Caroline. The desire of improving their conditions 
is not however, in all cases a sufficient motive to rouse 
the industry of the lower classes. I once knew an easy, 
indulgent landed proprietor, who having no ambition to 
increase his income could never be induced to raise his 
rents; his tenants, finding that they could pay their 
landlord and maintain their families as well as their 
neighbors, with nruch less labor, neglected their farms, 

1281. What anecdote is related in Dr Franklin's works ? 1282, 

For what does Mrs B. say the poor are often reproached ? 1283. 

In what does she delight respecting the poor ? 1284. What case 

does Caroline mention to show that the desire of improving their 
condition, does not always rouse the poor to industry ? 



324 ON EXPENDITURE. 

and became so idle and disorderly, that the estate was 
the least productive of any in the country. 

Mrs B. The country thus suffered from the well- 
meant, but ill-judged indulgence of this landlord. 

Caroline. But why was not the industry of these 
tenants stimulated by the desire of raising themselves in 
the world, which the forbearance of their landlord 
enabled them so easily to do ? 

JV[rs B. In the course of time it probably would 
have had that effect ; but when uneducated m.en obtain 
-an increase of wealth, the first use they generally make 
of it is to procure indulgences and exemption from 
labor ; it is only after becoming sensible that idleness 
leads them back to poverty, that they think of turning 
their wealth to better account. Well educated people 
seldom require the experience of so severe a lesson, but 
amongst the lower classes it is not uncommon to find 
that a great, and especially a sudden accession of riches, 
terminates in ruin. 

Caroline, There are frequently instances of poor 
people being ultimately ruined by a high prize in the 
lottery. 

Mrs B. And the lower the state of ignorance and 
degradation of mind of the poor man who gains the 
prize, the more certain is his ruin. The different slate 
of improvement of the lower classes in England, in Scot- 
land, and in Ireland, are strongly exemplified in this 
respect. If you were to give a guinea to a Scotch 
peasant, he would consider long how he could turn it to 
the best account ; he would perhaps buy a pig, or some- 
thing that would bring a future profit. An English 

1285. Why were these tenants not stimulated to avail themselves 

of the advantages placed within their reach ? 1286. What is 

said usually to be the result of a sudden accession of riches? 

1287. By v.'hat do poor people often become ruined ? 1288. On 

what does the greater ceriainty of ruin in such cases depend .'' 

1289. In whatcountries is the different state of improvement of the 
lower classes strongly exemplified ? 



ON EXPENDITURE. 325 

peasant is not quite so long sighted, yet he would contrive 
to derive some substantial advantages from the gift of a 
guinea ; he would probably lay it out in repairing his 
cottage, or in purchasing some new clothes for his chil- 
dren. But the Irishman, whose joy would be the greatest 
of the three at such an unexpected acquisition of wealth, 
would in all likelihood spend the whole of it in drinking 
whiskey with his friends, and thus disable himself for the 
labor of the following day. 

Caroline. And do you suppose that a sudden and 
considerable increase of wages would be attended with 
mischievous effects to the laboring poor ? 

JWrs IB. In the first instance it probably would. In 
manufactures it is generally found that an accidental 
increase of wages arising from a sudden demand for 
workmen, is productive of intemperance and disorderly 
conduct ; and this has been urged as a general objection 
to high wages ; but this bad effect seldom takes place 
unless the augmentation be sudden and unlocked for, and 
it discontinues when the high wages become regularly 
established. You may almost consider it as certain, 
that uneducated men will derive no advantage from such 
an augmentation of income as raises them suddenly 
above their accustomed habits of life. The beneficial 
effects, I have described to you in one of our preceding 
conversations as arising from increasing wealth and 
demand for labor, must be gradual, in order to prove 
useful to the lower classes. 

Caroline. All that you have said reconciles me, in 
a great measure, to the inequality of the distribution of 
wealth ; for it proves that, however great a man's pos- 
sessions may be, it is decidedly advantageous to the 

1290. What case of illustration is mentioned in the use made of a 

guinea, hy the three persons ? 1291. What evil^ would result 

from a sudden and considerable increase of wages in manufactures? 

1292. What does Mrs B. consider as almost certain with 

uneducated persons ? 1293. What reconciles Caroline to the 

inequality of wealth ? 

28 



326 ON EXPENDITURE. 

country ibat he should stiJl endeavor to augment them. 
Formerly I imagined that whatever addition was made 
to the wealth of the rich was so much subtracted from 
the pittance of the poor ; but now I see that it is, on the 
contrary, an addition to the general stock of wealth of the 
country, by which the poor benefit equally with the rich. 

J\Irs B. Yes ; every accession of wealth to a coun- 
try must have not only employed laborers to produce it, 
but will in future employ other laborers in order that the 
proprietor may derive an income from it. For every 
increase of capital is the result of a past and the cause of 
a future augmentation of produce ; therefore whatever a 
man's property niay be, he should be encouraged to im- 
prove it. I will read you an eloquent passage in Ben- 
tham's Theorie de la Legislation on the subject of 
luxury. 

" L'attrait du plaisir, la successions des besoins, le de- 
sir actif d'ajouter au bien etre, produiront sans cesse, 
sous le regime de la surete, de nouveaux efforts verse des 
nouvelles acquisitions. Les besoins les jouissances, ces 
agens universels de la societe apres avoir fait eclore les 
premieres gerbes de hies, eleveront peu a peu les maga- 
zins de I'abondance toujours croissans et jamais remplis. 
Les desirs setendent avec les moyens ; I'horizon s'ag- 
grandit, a mesure qu'on s'avance, et chaque besoin nou- 
veau egalement accompagne de sa peine et de son plaisir 
devient un nouveau principe d'action ; I'opulence qui n'est 
qu'un terme comparatif n'arrete pas memo ce mouve- 
ment, une fois qu'il est imprime, au contraire plus on 
opere en grand, plus la recompense est grande, et par 
consequent plus est grande aussi la force du motif qui 
anime I'homme au travail. 

" On a vu que I'abondance se forme peu a peu par 

1294. What is said of the accession of wealth to a country in 

connexion with the employment of labor ? 1295. Of what is 

every increase of capital the result? 1296. From what French 

writer is a quotation made ? 



m 



ON EXPENDITURE. 327 

I'operation continue des memes causes qui ont produit la 
subsistence. U n'y a donee point d'opposition entre ces 
deux buts. Au conlrairie plusl'abondance augmente plus 
on est sur de la substance. Ceux qui blament I'abondance 
sous le nom de Luxe n'ont jamais saisi celte considera- 
tion. 

" Los intemperies, les guerres, les accidens de toute 
espece attaquent souvent le fond de la subsistence ; en- 
sorte qu'une societe qui n'auroit pas de superflue et me- 
me beaucoup de superflu seroit sujette a manquer sou- 
vent de necessaire ; c'est ce qu'on voit obez les peuples 
sauvages. C'est ce qu'on a vu frequemment cbez toutes 
les nations dans les terns de I'antique pauvrete. C'est ce 
qui arrive encore de nos jours dans les pays peu favorises 
de la nature, tel que la Suede, et dans ceux ou le gou- 
vernement contrarie les operations du commerce au lieu 
de se borner a le proteger. Mais les pays ou Ics luxe 
abonde et ou I'administration est eclairee, sont a I'abri de 
la famine. Telle est I'heureuse situation de I'Angleterre. 
Des manufactures de luxe deviennent des bureaux d'as- 
surances contre la disette. Une fabrique de bierre ou 
d'amidon se convertira en moyen de subsistence. Que 
de fois n'a t'on pas declame contre les cbevaux et les 
chiens comme devorant la subsistence des hommes ! Ces 
profonds politiques ne s'elevenl que d'un degre au dessus 
de ces apotres du desinteressement qui pour ramener 
I'abondance des bles ccurent incendier les magazins." 

Caroline, We, had not yet considered luxury under 
this point of view; I confess I was of the opinion of 
those who thought that dogs and horses devoured the 
subsistence of man, but I am much better pleased to 
think that the food which luxury raises for the nourish- 
naent of those animals may, in case of necessity, become 
nourishment for the human species ; and, if a famine 
should take place, even the animals themselves would 
afford a resource. 

1297, What does Caroline say of this extract ? 



328 ON EXPENDITURE. 

Mrs B. Hair powder we may consider as a kind of 
granary for the preserv^ation of wheat, for though the 
powder would not, unless in cases of very great urgency, 
be converted into food, the quantity of corn annually 
grown for the purpose of making hair powder would, 
during a moderate scarcity, find its way more readily to 
the baker's than to the perfunier's shop. 

Caroline. And pray, Mrs B., what do you think of 
the luxury of the Romans ? We read in Pliny of a 
Roman lady who was dressed in jewels to the amount 
of 300,000/. I recollect also, an account of a dish offish 
having cost 64/. 

Mrs B. These are but trifling instances of profusion, 
in comparison of some some others related of the 
Romans. Mark Anthony expended 60,000/. in an 
entertainment given to Cleopatra. And the suppers of 
Heliogabalus cost 6000/. every night. But; nothing can 
be said in apology for the luxuries ofthe Romans ; they 
were extremely objectionable, because their wealth did 
not proceed from industry, but from plunder. Their 
extravagance and profusion, therefore, far from being a 
spur to industry, acted in a contrary direction; it encou- 
raged the love of rapine in themselves, whilst it depressed 
the spirit of industry in the countries subject to their 
power, by destroying the strongest of all inducements 
to labor, the security of property. It has been well 
observed by Macpherson, that "The luxuries of the 
Romans cannot be considered as the summit of a general 
scale of prosperity ; it was a scale graduated but by one 
division, which separated immense wealth and power 
from abject slavery, wretchedness, and want." 

In considering the advantages to be derived from 

- 1298. What does Mrs B. say of hair powder? 1299. What 

instances of extravagance does Caroline mention to have existed 

among the Eomans? 1300. What greater instances does Mrs 

B. mention ? 1301. Is there any apology for the luxuries of the 

Romans ? 1302. Why is there no apology for them ? 130E» 

What does Macpherson say of the luxuries of the Romans ? 



ON EXPENDITURE. ~ 329 

luxury, we must, however, carefully remember, that it 
acts in a twofold manner; whilst on the one hand, it 
encourages industry, on the other, it increases expen- 
diture ; so far as its productive powers prevail over its 
prodigal effects, it is beneficial to mankind ; but in the 
contrary case it becomes an evil, and when it encroaches 
on capital we have seen that it is an evil of the greatest 
magnitude. 

The grand object to be kept in view in order to 
promote the general prosperity of tiie country, is the 
increase of capital. But it is not in the power of the 
legislature to promote this end in any other way than by 
providing for the security of property ; any attempts to 
interfere either with the disposal of capital or with the 
nature and extent of expenditure, are equally discour- 
aging to industry. 

Caroline, Whoever, I conceive, augments bis capital 
by savings from his income, increases the general stock 
of subsistence for the laboring classes ; whilst he who 
spends part of his capital diminishes that slock of sub- 
sistence, and consequently the means of employing the 
laboring classes in its reproduction. 

Every man ouglit, therefore, to consider it ns a moral 
duty, independently of his private interest, to keep his 
expenditui-e so far within the limits of his income, that he 
may be enabled every year to make some addition to his 
capital. 

Mrs B. And the question what tliat addition should 
be, must depend entirely upon the extent of his income, 
and his motives for expenditure. We can only point 
out illiberal parsimony, and extravagant prodigality as 

1304. How far is it here said that luxury is beneficial, and how 

far is it an evil ? 1305. What is said to be the grand object to 

be kept in view in order to promote the prosperity of a country? 

■ 1306. What does Caroline say of the person who augments his 

capital, and of the person who diminishes it ? 1307. What, in 

relation to this subject, does she consider a moral duty? 1308. 

On what must the addition to one's capital depend ? 
28^ 



330 ON EXPENDITURE. 

extremes to be avoided ; there are so many gradations 
in the scale between them, that every man must draw 
the line for himself, according; to the dictates of his good 
sense and his conscience, and in so doing should consult 
perhaps, the moral philosopher as well as the political 
economist. He who has a large family to maintain and 
establish in the world, though more strict economy be 
required of him, c^^nnot be expected to make savings 
equal to those of a man of a similar income, who has not 
the same calls for expenditure. 

^ But however large a man's income may be, he has no 
apology for a neglect of economy. Economy is a virtue 
incumbent on all ; a rich man may have sufficient motives 
to authorize a liberal expenditure, but he can have none 
for negligence and waste ; and however immaterial to 
himself the loss which waste occasions, he should con- 
sider it as so much taken from that fund, which provides 
maintenance and employment for the poor. 

1309. What extremes in the case can be pointed out ? 1310, 

What case is mentioned, where under dissimilar circumstances a 
difference of savings is made ? 1311. What is said of economy ? 



SCHOOL BOOKS. 

BOWLES AND DEARBOR^T, 

72 WASHINGTON STREET, BOSTON, 

Keep a complete assortment of SCHOOL BOOKS, which 
they will sell as cheap as can be purchased elsewhere. 
School Committees and Instructers may at all times receive 
copies of works for examination, gratis. They have lately 
published, 

THP JUVENILE COMPANION,by Rev. J. L.Blake, A.M. 

This work is intended for a reading Book for Second and 
Third Classes. By the annexed extract from the preface, it 
will be seen that great care has been taken by the author in 
the selection of materials. The first edition, consisting of 
2000 copies, has been nearly all disposed of in the course of a 
few months — the publishers are about stereotyping it, and will 
be able to answer orders to any amount. 

School Committees and Instructers, who have not yet exam- 
ined this work, are invited to do so — and may receive a copy 
gratis for that purpose, on application to the publishers. 

The Companion contains 300 pages — is printed on a fine pa- 
per, and will be sold at a less price than any other school book 
in the market containing the same quantity of matter. 

EXTRACT FROM THE PREFACE. 

"The object of this volume is to make the reader acquainted 
with particularly interesting and important events in history and 
biography, presuming that an inclination will thereby be formed 
in the minds of young persons, for connected and extensive 
reading upon those subjects. Moreover, in the selection of 
materials, such have been taken as were of a decided charac- 
ter in their moral tendency. Whether a good or bad quality 
were to be represented, unless it were so strongly marked, that 
a child would be led of his own accord, and instantaneously to 
admire the one, and abhor the other, it was deemed unfit for 
use. Thus a literary and moral purpose is accomplished at 
the same time, and by the same labor. It is an undoubted 
truth, that there is no better way to inculcate the principles 
and the love of what is excellent, than by the exhibition of real 
excellence ; and that there is no better way to guard one 
9,gainst the commission of what is ofa contrary character, than 
by the display from real life of vicious and vile conduct. * * 

" The object of the author has been to furnish young persons, 
both in families and in schools, with a compilation that will never 



fail to be interesting — that will always be found instructive— 
that will always leave on the mind of the reader an impression 
favorable to virtue and piety." 

The following are among the recommendations received by the 
publishers. 

From Barnum Field, A. M. Master of the Hawes Grammar 

School, Boston, Mass. 
Messrs Bowles & Dearborn, 

Gentlemen — I have with great pleasure examined the "Ju- 
venile Companion," and hesitate not to say, that I think it bet- 
ter calculated than any book with which I am acquainted, to 
interest and instruct the youthful reader. It is well adapted 
for a class book, and its merits only need to be known to bring 
it into extensive use. 

June 12th, 1827. BARNUM FIELD. 

From the lastructers of the Providence High School. 

Providence, June 23d, 1827. 
Messrs Bowles & Dearborn, 

Gentlemen — We have examined the book you sent us enti- 
tled " The Juvenile Companion," and we are so well pleased 
with it, that we shall immediately introduce it into our semina- 
ry as one of our reading books — we have consequently de- 
sired our bookseller to procure a quantity for us forthwith. 

From the Rev. Calvin Wvlcoit, Preceptor of the Academy^ Hano- 
ver, Mci^s. 

Hanover, Mat, 28, 1827. 
Messrs Bowles & Dearborn, 

I have examined the " Juvenile Companion," and am happy 
to inform you that I consider it one of the best books for prima- 
ry schools that I have seen. It cannot fail of meeting the ap- 
probation of parents and teachers as far as it is known. — 
Yours respectfully, &c. CALVIN WOLCOTT. 

From the Principal of a Seyninary in Roxhury, Mass. 
Messrs Bowles & Dearborn, 

Having with much pleasure examined the " Juvenile Com- 
panion," transmitted to me a short time since, I cheerfully give 
it as my opinion, that it is well calculated for the instruc- 
tion of youth, and as an introduction to the Historical Reader. 
The judicious selection and happy arrangement both of prose 
and poetry, the purity and simplicity of diction, the historical 
facts infused, and above all the moral sentiments inculcated, 
inspire a belief, that the author's most sanguine expectations 
will be realized. — Very resnectfully yours, 

THOMAS SNOW. 



From the Rev. Charles H. Jllden, Teacher of Classical School in 
Providence, R. I. 
Olney Place, Providence, June 18. 
Messrs Bowles and Dearborn, 

I have examined with considerable attention the "Juvenile 
Companion;" and have to say that I deem it well calculated 
for the purposes intended: adding to the many obligations un- 
der which our youth have long been to the Rev. Author. 

There can be no question, I think, of its general reception 
into our common schools, 
fc Very respectfully, gentlemen, your obedient servant, 

CHARLES HENRY ALDEN. 

Extract frojn the American Journal of Education. 

" This compilation possesses all the recommendations of the 
Historical Reader, in addition to the consideration of its 
being well adapted to an earlier stage of educatiop, and one 
in w^hich the scarcity of good reading books has been much 
felt. The moral uses of the lessons have, we think, been kept 
very steadily in view ; and the natural vivacity of the narra- 
tives facilitates an easy and animated style of reading." 



PRIMARY CLASS BOOK. 

THE EASY READER, desisneH to be used next in 
course after the spelling book, in schools and families. 
By John Frost. 

recommendations. 

Frotn G. B. Emerson, A. M. Principal of a Seminary for Young 
Ladies, in Boston, to the compiler. 

March 1, 1828. 
Dear Sir — I have examined your "Easy Reader" with 
great pleasure. The selection is exceedingly well adapted 
to children who have just overcome the first difficulties of 
learning to read. The moral tone of the instruction conveyed, 
the purity of the style, the variety and simplicity of the sub- 
jects, suit it at once to form good readers, and to improve the 
mind and the feelings of children. 

Yours with great esteem, 

G. B. EMERSON. 



FroniA. Andrews, JL. M. Principal of the Bowdoin School, 
Eoston. 

Bowdoin School, Feb. 26, 1828. 
To Mr John Frost, 

Sir — I have, ^vitli great pleasure, examined your " Easy- 
Reader." The reading lessons appear to me to be judiciously 
selected from the best authors, who have written for the 
amusement and instruction of youth. They treat of subjects, 
interesting to children, conveyed in language within their com- 
prehension, and well adapted to arrest their attention, and to 
cherish in their minds, sentiments of virtue. In our schools, 
books are frequently put into the hands of children, far abov^ 
their capacit}'- ; this makes the task of teaching them to read 
correctly, very difficult, not to say impossible. "The Easy 
Reader" will, it is confidently believed, render the task of 
primary instruction, comparatively, a light and pleasant one, 
both to teacher and pupil. 

Yours respectfully, 

ABRAHAM ANDREWS. 

Fro7n Mr J. H. Ptice, Principal of a Private Academy, Boston. 
Mr J. Frost, 

Dear Sir — I have examined with much interest your late 
publication, — The Easy Reader. It appears to me admirably 
calculated to supply that deficiency in reading books, of which 
Instructers have so long complained. I cheerfully recom- 
mend it for the use of that class of children for whom it is in- 
tended. J. H. PRICE. 

Salem Street Academy, Boston, March 15, 1878. 
Mr John Frost, 

Dear Sir — I have looked over yolir little book called the 
Easy Reader, and am very Vv^ell pleased v>dth it. 

I have for some time past been familiar with most of the ma- 
terials of which it is made, and have considered them the best 
productions, to which chililren can have access. I think it 
well selected and well arranged, and a much better book 
than most of those, which occupy the place for which this is 
intended. 

You have my cordial wishes for its success, as I think it cal- 
culated to be useful. 

Yours most respectfully, 

SILAS BLAISDALE. 

From Berijaniin F. Farnswnrth, Principal and Professor in the 

Institution at JYew Hampton, J\\ H. 
Messrs Boavles and Dearborn, 

The little volume, entitled the " Easy Reader," lately sent 
me for examination, is well adapted to the purpose for which 
it was designed. There has been a deficiency of compilations, 



suitable to succeed the Spelling Book in our Primary Schools. 
It is quite important, that children should be furnished with 
exercises in reading, perfectly intelligible, and as interesting 
as possible ; otherwise, they cannot be expected to learn to 
read with propriety, even with the best instruction. Mr Frost 
has judiciously given the preference to pieces of a moral and 
historical description ; he has combined a pleasing variety ; 
and the compositions ai'e generally, both pure and sim])le in 
their style. I would recommend the work to the attention of 
the managers of elementary instruction, in both our public and 
our private schools. BENJAMIN F. FARNSWOiiTH. 
J^ew Hampton, May 5th, 1828. 



AN ABSTRACT OF BrBLE HfSTORY, 

For the use of Young Persons, with Questions for Examina- 
tion, a scheme of Scripture Chronology, &c. First American, 
revised and altered, from the Seventh London edition. 

EXTRACTS FROM THE PREFACE. 

"A small Abridgment of the Scripture History, originally drawn 
up for a Sunday School, beyond vv'hich the author had not flat- 
tered himself that it would find its way, having been several 
times called for by the public, advantage has been taken of 
each return to press, to make such additions and improvements 
as occurred to the author and his friends. 

As it was originally intended for a First Book, a few les- 
sons were prefixed, composed in words of one syllable ; which 
might at once be easy to young readers, and convey some 
tolerably accurate, but familiar and intelligible idea of God, 
and man's duty to him, previous to their becoming acquainted 
with his works of creation and providence, in the way of his- 
torical narration ; a mode of religious instruction which is the 
most entertaining and captivating, as well as the most suited to 
the capacity of the youthful mind, which can perceive the 
connexion of a story with its moral, before it can follow an ab- 
struse argument, or take an interest in a systematic summary 
of rules. These lessons are still retained ; and a slight sketch 
of scripture geography is added to the whole, with a view to 
excite, but not to satisfy, curiosity. 

Newcastle, March 1, 1824. 
The return of this little v/ork a seventh time to press, has 
given the Author an opportunity of a further revisal and cor- 
rection, by which he hopes that it will be found in many re- 
spects considerably improved. — A short introduction, explana- 
tory of the words Bible, Testament, Covenant, Scripture, Ca- 
non, &c. is prefixed ; and a short Scheme of Scnpture Chro- 
nology is added. 



^ / 
On the first reading, the Author would recommend that 

children be indulged with reading, or hearing read, the full 

account as it stands in the Bible, of any particular history 

which may strike them. 

But the Author submits it to the consideration of Parents 
and Teachers, that it should not be made a First Book, and 
then be thrown aside ; but that after a subsequent perusal of the 
Scriptures at large (perhaps after more than one) it may very 
profitably be taken up again and again ; and that thus the 
several incidents contained in Scripture history may be more 
deeply, imprinted on the mind, together with the instruction 
intended to be conveyed by them." 

The best recommendation the publishers can add to the 
above, is, that the v^^hole of the first edition has been sold in 
about two months. 



OUTLINES OF SCHIPTURE GEOGRAPHY, 

with an Atlas. By J. E. Worcester. 

The author of this little treatise on Scripture Geography, 
has prepared it under the impression that a work of the kind 
was wanted, and if well executed, would be useful. He is 
not acquainted with any treatise on the subject, that is at 
once concise, comprehensive, and well adapted to elementary 
instruction. 

Some knowledge of the countries and places in which the 
memorable transactions recorded in the Bible took place, can- 
not but be regarded as important ; yet it is a branch of learn- 
ing that has been much neglected ; and nothing is more com- 
nion than to meet with well educated persons, who have little 
acquaintance with the subject. 

The Outlines, and the accompanying Atlas, are designed 
to be used throughout in connexion. The plan on which the 
work has been formed, will be found simple; easy both to the 
instructor and the pupil ; and well adapted, it is hoped, to ele- 
mentary instruction in schools and families. 

The subject is treated, in a great measure, chronologically ; 
the circumstances by which many of the places had been ren- 
dered memorable, are briefly mentioned ; and the nature of 
the work wiU render it useful in facilitating the study of Sa- 
cred History. 

It has been the design of the author to follow the best 
guides. He has noticed such matters as he deemed most im- 
portant; but has avoided all discussion of doubtful topics. " 

The Atlas v/ill be found of great use in illustrating the sub- 
ject. The difi:erent maps which have been published by dif- 
ferent authors, for the illustration of the geography of the 
Scriptures, differ from each other in many particulars. The 
laSt five maps in this Atlas have been formed substantially 
fi-om maps contained in Palmer's " Bible Atla,s." 



